Carnegie  Endowment  for  International  Peace 

DIVISION    OF    ECONOMICS    AND    HISTORY 
JOHN   BATES  CLARK,    DIRECTOR 


PRELIMINARY  ECONOMIC  STUDIES  OF  THE  WAR 


EDITED    BY 

DAVID  KINLEY 

Professor  of  Political  Economy,  University  of  Illinois 
Member  of  Committee  of  Research  of  the  Endowment 

No.  19 


PRICES   AND    PRICE    CONTROL    IN    GREAT 

BRITAIN  AND  THE  UNITED  STATES 

DURING  THE  WORLD  WAR 


BY 

SIMONJ.ITMAN 

Professor  of  EconomIcs7  University  of  Illinois 


NEW  YORK 

OXFORD  UNIVERSITY  PRESS 

AMERICAN  BRANCH:    35  WEST  32nd  STREET 

LONDON,   TORONTO,    MELBOURNE    AND    BOMBAY 

1920 


hf6 

ex    Z^ 

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COPYRIGHT  1920 

BY  THE 

CARNEGIE    ENDOWMENT    FOR 

INTERNATIONAL   PEACE 

WASHINGTON,  D.  C. 


THE  RUMFORO  PRESS 
CONCORD 


PRICES  AND   PRICE   CONTROL   IN  GREAT 

BRITAIN  AND  THE  UNITED  STATES 

DURING  THE  WORLD  WAR 


PRELIMINARY  ECONOMIC  STUDIES  OF  THE  WAR 

EDITED  BY  DAVID  KINLEY 

Professor  of  Political  Economy,  University  of  Illinois 
Member  of  Committee  of  Research  of  the  Endowment 

1.  Early  Economic  Effects  of  the  War  upon  Canada.     By  Adam  Shortt,  formerly  Commis- 

sioner of  the  Canadian  Civil  Service,  now  Chairman,  Board  of  Historical  Publications, 
Canada. 

2.  Early  Effects  of  the  European  War  upon  the  Finance,  Commerce  and  Industry  of 

Chile.     By  L.  S.  Rowe,  Professor  of  Political  Science,  University  of  Pennsylvania. 

3.  War  Administration  of  the  Railways  in  the  United  States  and  Great  Britain.     By 

Frank  H.  Dixon,  Professor  of  Economics,  Dartmouth  College,  and  Julius  H.  Parmelee, 
Statistician,  Bureau  of  Railway  Economics. 

4.  Economic  Effects  of  the  War  upon  Women  and  Children  in  Great  Britain.     By  Irene 

Osgood  Andrews,  Assistant  Secretary  of  the  American  Association  for  Labor  Legislation. 

5.  Direct  Costs  of  the  Present  War.     By  Ernest  L.  Bogart,  Professor  of  Economics,  Univer- 

sity of  Illinois. 

6.  Effects  of  the  War  upon  Insurance  with  Special  Reference  to  the  Substitution 

OF  Insurance  for  Pensions.     By  William  F.  Gephart,  Professor  of  Economics,  Wash- 
ington University,  St.  Louis. 

7.  The  Financial  History  of  Great  Britain,  1914-1918.     By  Frank  L.  McVey,  President, 

University  of  Kentucky. 

8.  British  War  Administration.     By  John  A.  Fairlie,  Professor  of  Political  Science,  Univer- 

sity of  Illinois. 

9.  Influence  of  the  Great  War  upon  Shipping.     By  J.  Russell  Smith,  Professor  of  Industry, 

University  of  Pennsylvania. 

10.  War  Thrift.     By  Thomas  Nixon  Carver,  Professor  of  Political  Economy,  Harvard  Univer- 
sity. 

/ii.  Effects  of  the  Great  War  upon  Agriculture  in  the  United  States  and  Great  Britain. 
By  Benjamin  H.  Hibbard,  Professor  of  Agricultural  Economics,  University  of  Wisconsin. 

12.  Disabled  Soldiers  and  Sailors — Pensions  and  Training.     By  Edward  T.  Devine,  Pro- 

fessor of  Social  Economy,  Columbia  University. 

13.  Government  Control  of  the  Liquor  Business  in  Great  Britain  and  the  UnitedStates. 

By  Thomas  Nixon  Carver,  Professor  of  Political  Economy,  Harvard  University. 

14.  British  Labor  Conditions  and  Legislation  during  the  War.     By  Matthew  B.  Hammond, 

Professor  of  Economics,  Ohio  State  University. 

15.  Effects  of  the  War  upon  Money,  Credit  and  Banking  in  France  and  the  United 

States.     By  B.  M.  Anderson,  Jr.,  Ph.D. 

16.  Negro  Migration  during  the  War.     By  Emmett  J.  Scott,  Secretary-Treasurer,  Howard 

University,  Washington,  D.  C. 

17.  Early  Effects  of  the  War  upon  the  Finance,  Commerce  and  Industry  of  Peru.     By 

L.  S.  Rowe,  Professor  of  Political  Science,  University  of  Pennsylvania. 

*i8.  Government  War  Control  of  Industry  and  Trade,  with  Special  Reference  to  Great 
Britain  and  the  United  States.     By  Charles  Whiting  Baker,  New  York  City. 

19.  Prices  and  Price  Control  in  Great   Britain  and  the   United  States   during   the 
World  War.     By  Simon  Litman,  Professor  of  Economics,  University  of  Illinois. 

*20.  The  Relation  of  the  Economic  and  Social  Conditions  in  Southeastern  Europe  and  in 
Alsace-Lorraine  to  Conditions  of  Peace.  Two  volumes.  'By  Stephen  Pierce  Dug- 
gan.  Professor  of  Education,  College  of  the  City  of  New  York. 

*2i.  The  Germans  in  South  America:  A  Contribution  to  the  Economic  History  of  the  War. 
By  C.  H.  Haring,  Professor  of  History,  Yale  University. 

*22.  Effects  of  the  War  on  Pauperism,  Crime  and  Programs  of  Social  Welfare.  By  Edith 
Abbott,  Lecturer  in  Sociology,  University  of  Chicago. 

♦23.  Monetary  Conditions  in  War  Times  in  India,  Mexico  and  the  Philippines.  By  E.  W, 
Kemmerer.  Professor  of  Economics  and  Finance,  Princeton  University. 

24.  Direct  and  Indirect  Costs  of  the  Great  World  War.     By  Ernest  L.  Bogart,  Professor 
of  Economics,  University  of  Illinois.     (Revised  edition  of  Study  No.  5.) 

*2S.  Government  War  Contracts.     By  John  F.  Crowell,  Consulting  Economist,  New  York  City. 

♦26.  Cooperative  Movement  in  Russia.     By  E.  M.  Kayden. 

THE  CARNEGIE  ENDOWMENT  FOR  INTERNATIONAL  PEACE 

2    JACKSON    PLACE,    WASHINGTON,    D.    C. 

*  These  numbers  have  not  yet  been  published. 

iv 


EDITOR'S   PREFACE 

Professor  Litman's  study  of  prices  is  a  welcome  addition 
to  the  literature  of  the  subject.  The  general  trend  of  its  con- 
clusions, however,  will  not  surprise  a  student  of  economic 
history.  The  charges  of  profiteering  and  manipulation  which 
have  been  so  rife  in  the  past  three  years  are  paralleled  in  the 
experience  of  the  world  in  every  great  war.  Efforts  to  control 
these  movements  by  law  show  in  general  a  similar  history  and 
similar  results  on  all  occasions.  Here  and  there,  under  such 
circumstances,  a  government  is  able  to  catch  and  punish  a 
profiteer.  But  legal  action  on  the  whole  has  had  little  effect 
at  any  time  in  preventing  or  removing  the  evil  practices  that 
have  called  forth  so  much  popular  denunciation. 

Still  more  true  is  it  that  the  legal  activity  of  governments, 
on  the  whole,  has  had  little  influence  in  fixing  prices  or  in 
keeping  them  stable.  Most  of  the  evidence  to  this  effect, 
when  carefully  studied,  shows  that  the  results  have  been  ob- 
tained in  occasional  cases  and  have  had  little  permanent 
effect.  The  truth  is  that  the  lines  of  economic  activity  for 
the  accomplishment  of  even  one  purpose  are  so  numerous 
that  the  severing  of  one  usually  serves  to  render  the  others 
more  open.  Most  of  ihe  good  effect  which  the  agitation, 
legislation  and  legal  prosecutions  of  the  past  three  years  have 
had  in  this  field  has  been  a  result  of  psychological  rather 
than  of  legal  influences.  The  great  bulk  of  business  and 
popular  opinion  in  the  United  States  has  been  in  favor  of 
the  proposition  that  individuals  should  not  be  permitted  to 
make  undue  profit  at  the  expense  of  the  people  in  a  crisis. 
The  good  results  of  the  agitation  can  be  attributed,  therefore, 
to  the  general  high  standard  of  business  integrity  rather  than 
to  fear  of  legal  prosecution.  This  may  be  fairly  said,  making 
allowance  for  all  exceptions  in  the  way  of  successful  prose- 
cution by  the  officers  of  the  government.  It  was  a  realiza- 
tion beforehand  of  the  practical  impossibility  of  controlling 


VI  EDITOR  S    PREFACE 

the  situation  by  law  which  evidently  led  the  Food  Adminis- 
tration to  rely  largely  on  appeals  to  the  good  sense  and  patri- 
otism of  the  people  in  its  attempt  to  keep  the  prices  of  food 
stable.  To  have  fixed  prices  for  the  multitude  of  articles 
consumed  as  food  under  the  multifarious  and  daily  changing 
economic  conditions  would  have  been  futile  and  foolish..  On 
the  whole,  the  policy  of  our  government  was  sound  in  laying 
down  prices  for  certain  great  staples  and  relying  on  the  judg- 
ment of  the  people,  based  on  information  furnished  freely  by 
the  government  from  day  to  day,  to  see  to  it  that  they  were 
not  exploited. 

It  is  too  much  to  hope  that  another  generation  will  take 
to  heart  the  lessons  taught  by  the  experiences  recorded  in 
this  and  other  volumes  of  this  series  or  works  dealing  with 
similar  subjects.  Each  generation,  like  each  individual, 
must  learn  in  large  measure  from  its  own  experience.  Never- 
theless, history  shows  that  there  are  always  some  leading 
minds  who  are  able  to  exert  an  influence  in  a  new  crisis  in  the 
direction  of  sanity  and  safety  by  their  studies  of  similar  expe- 
riences in  the  past.  To  that  extent,  at  any  rate,  we  may  hope 
that  the  influence  of  these  studies  will  be  helpful. 

David  Kinley, 

Editor. 
Urbana,  Illinois, 
July  i6,  1920. 


FOREWORD 

The  part  of  the  work  dealing  with  price  control  in  the 
United  Kingdom  was  finished  in  July,  1918;  that  which  con- 
siders prices  and  price  regulation  in  the  United  States  was 
begun  in  November,  1918,  and  concluded  in  June,  1919. 
Detailed  discussions  of  such  items  as  causes  of  the  rise  in 
prices,  profiteering,  industrial  unrest,  which  are  included  in 
the  treatment  of  price  control  in  Great  Britain,  are  omitted 
from  the  part  considering  price  fixing  in  the  United  States; 
this  was  done  chiefly  because  such  an  inquiry,  although  it 
would  have  presented  some  additional  illustrative  material, 
would  have  involved  too  much  repetition  and  lengthened 
considerably  the  study,  without  aiding  either  in  the  statement 
of  the  problems  or  in  their  elucidation.  On  the  other  hand, 
the  consideration  of  the  control  of  articles  directly  used  for 
war  purposes,  such  as  iron  and  steel,  copper,  hides  and  leather, 
etc.,  which  is  omitted  from  the  part  dealing  with  Great 
Britain,  is  included  in  the  investigation  of  price  fixing  in  the 
United  States. 

The  author  wishes  to  express  his  deep  appreciation  to  Pro- 
fessor David  Kinley  for  notes  and  other  material  which  the 
latter  gave  him  when  he  found  that  lack  of  time  would  make 
it  impossible  for  him  to  do  his  share  of  what  was  originally 
intended  to  be  a  joint  undertaking. 

Simon  Litman. 


vn 


CONTENTS 
Part  I — Great  Britain 

CHAPTER  PAGE 

I     Price  Control  in  the  Past 5 

II     Movement  of  Prices  since  Outbreak  of  War   ...  12 

III  Causes  of  the  Rise  in  Prices 36 

IV  Profiteering 64 

V  The  Condition  of  Workmen 78 

VI     Rise  in  Prices  and  Industrial  Unrest 92 

VII     Governmental  Control  and  Price  Fixing — Food  104 

VIII     Governmental  Control  and  Price   Fixing — Coal  142 

IX     Home  Production  of  Food  and  Minimum  Prices  151 

X     Criticism  of  Price  Fixing 160 

Appendix  to  Part  I 169 

Part  II — The  United  States 

I     Movement  of  Prices  during  the  War 181 

II     Wages  and  Cost  of  Living 194 

III  Legislation  Authorizing  Price  Fixing  and  Price 

Fixing  Agencies 203 

IV  Wheat,  Flour  and  Bread 219 

V  Sugar 237 

VI     Meat  and  Dairy  Products 249 

VII     Fuel 262 

VIII     Iron  and  Steel 278 

IX     Nonferrous  Metals 290 

X     Fibers  and  Textiles 298 

XI     Miscellaneous  Products 304 

XII     Conclusions 318 

Appendix  to  Part  II 321 

Index 327 


IX 


PART  I 
GREAT  BRITAIN 


INTRODUCTION 

The  various  orders  Issued  by  the  Army  Council,  the  Min- 
istry of  Munitions,  the  Admiralty  and  other  bodies,  to  whom 
authority  was  given  under  the  Defense  of  Realm  Act  to  fix 
prices,  are  not  included  in  this  "study.  A  great  many  of  these 
orders  were  requisitionary  in  nature,  and  although  their  indirect 
effect  upon  prices  for  the  civilian  population  may  have  been 
important,  the  consideration  of  these  orders,  with  their  mi- 
nute provisions,  had  to  be  omitted  from  a  preliminary  study 
of  price  control,  the  more  so  as  the  restrictive  regulations  of 
this  character  have  been  particularly  pronounced  during  the 
past  few  months  and  seem  to  grow  with  each  succeeding  day. 
It  is  futile  to  try  to  keep  up  at  present  with  the  measures 
passed  by  the  Army  Council  within  whose  jurisdiction  are  the 
woolen,  linen,  flax,  jute,  hides,  leather  and  hay  supplies,  with 
the  orders  of  the  Ministry  of  Munitions,  which  has  control 
over  iron,  steel,  aluminum,  copper,  etc.,  and  with  the  various 
other  enactments,  which  fixed  maximum  prices  on  matches, 
on  timber,  on  sulphuric  acid,  on  oils  and  fats,  and  on  many 
other  commodities. 

The  investigation  has  been  chiefly  confined  to  those  things 
which  most  vitally  affect  the  final  consumer  and  which  have 
provoked  the  greatest  amount  of  dissatisfaction  and  of 
discussion. 


CHAPTER   I 
Price  Control  in  the  Past 

Agitation  against  speculation  and  the  middleman  is  not 
new;  neither  is  the  attempt  to  prevent  the  first  and  to  control 
the  latter  by  means  of  legislative  enactments.  As  far  back 
as  301  A.D.  Diocletian  undertook  to  fix  the  price  of  certain 
commodities,  but  his  attempt  proved  a  failure.^ 

In  the  thirteenth  century  public  authorities  in  England  "felt 
themselves  bound  to  regulate  every  sort  of  economic  transaction 
in  which  individual  self-interest  seemed  to  lead  to  injustice. "^ 
Forestalling,  engrossing  and  regrating,  practices  roughly 
corresponding  to  the  more  modern  speculation  and  to  the 
"evil  practices"  of  the  present  day  middlemen,  were  punish- 
able by  law.  By  the  command  of  the  king,  no  forestaller  was 
"suffered  to  dwell  in  any  town";  such  a  man  was  branded  as 
"an  oppressor  of  the  poor,  the  public  enemy  of  the  whole 
community  and  country."^  Trade  regulations  were  guided 
by  the  general  principle  that  a  just  and  reasonable  price  only 
should  be  paid,  and  only  such  articles  be  sold  as  were  of  good 
quality  and  of  correct  measure.  Not  only  the  state,  but  also 
guilds  and  municipalities  acted  as  price  fixers  in  the  Middle 
Ages.  Most  enactments  were  promulgated  at  that  time  for 
the  purpose  of  preventing  some  particular  form  of  fraud  in 
some  particular  commodity.  But  there  were  a  number  of 
measures  passed  more  general  in  character.  Economic  con- 
ditions in  the  Middle  Ages  were  such  that  individuals  if 
unrestrained  by  law  could  easily  obtain  a  temporary  monop- 
oly over  any  of  the  basic  products.  The  supply  of  these 
was  usually  obtained  by  the  consumers  from  comparatively 
few    neighborhood    communities.     The    establishment    of    a 

^  J.  E.  Davies:   "Is  Price  Fixing  Possible,"  The  Independent,  October  20,  1917, 

P-  134- 

^  W.  J.  Ashley:  English  Economic  History,  vol.  i,  pt.  i,  p.  181, 
'  Ibid.,  p.  187. 


6  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

"corner"  in  grain  or  in  any  other  product  was  under  such 
circumstances  not  a  difficult  matter. 

An  attempt  to  control  both  the  wholesale  and  the  retail  price 
of  wine  by  fixing  a  maximum  was  made  by  the  British  Govern- 
ment in  1 199.  The  measure  failed^  and  in  1330,  after  a  long 
period  of  ineffectiveness,  a  new  law  was  passed,  which  re- 
quired the  merchants  to  sell  at  a  "reasonable"  price,  the 
latter  to  be  based  on  import  price  plus  expenses.  This  new 
measure  of  control  proved  as  futile  as  the  old  one,  and  in  a 
few  years,  because  of  changed  conditions  of  production  and 
trade,  the  price  of  wine  went  up  far  beyond  what  it  had  been, 
as  well  as  beyond  the  government  expectations. 

A  result  similar  to  this  followed  the  many  efforts  to  regulate 
the  prices  of  wheat  and  bread.  In  this  instance  the  govern- 
ment endeavored  to  fix  not  a  maximum  price  but  a  sliding 
scale.  The  first  attempt  was  made  as  early  as  1202.  The 
most  important  ordinance  on  the  matter  was  51  Henry  III. 
This  ordinance  fixed  changing  weights  for  the  farthing  loaf 
to  correspond  to  six  penny  variations  in  the  price  of  the  quar- 
ter of  wheat  from  tw^elve  pence  to  twelve  shillings.  The  law 
was  enforced  locally  on  sundry  occasions,  but  fell  gradually 
into  disuse. 

Of  particular  interest  is  the  more  recent  experience  with 
maximum  prices  which  France  underwent  at  the  close  of  the 
eighteenth  century.  The  first  law  establishing  a  maximum 
was  passed  on  May  3,  1793.  It  was  one  of  the  extraordinary 
measures  adopted  by  the  Committee  of  Public  Safety,  along 
with  a  progressive  tax  on  the  rich  and  forced  loans. ^  Spurious 
decrees  of  the  National  Assembly,  ordering  the  people  not  to 
pay  more  than  one  sou  for  a  pound  of  bread,  w^ere  circulated 
as  early  as  March  and  April,  1790.^  The  May  law  was 
passed  in  order  to  curb  speculation  and  profiteering,  as  well  as 
to  assure  comfort  to  the  poor.^  The  committee  promulgated 
it  under  the  pressure  of  public  opinion.     The  necessity  for 

1  Ashley:    op.  cit.,  p.  191. 

^  I.  R.  M.  Macdonald:  A  History  of  France,  vol.  iii,  p.  31. 

'  Kropotkin:  The  Great  French  Revolution,  p.  207. 

*  Morris:    The  French  Revolution,  p.  100. 


GREAT   BRITAIN  7 

passing  such  a  law  of  maximum  had  been  hinted  at  by  Saint 
Just  in  the  latter  part  of  1792.^ 

As  a  result  of  overissue  of  paper  money  and  the  blockade, 
an  intolerable  economic  situation  gripped  the  country  and  led 
to  widespread  dissatisfaction;  many  petitions  had  been  pre- 
sented to  the  government,  requesting  it  to  take  some  definite 
action  in  order  to  stop  the  rapid  rise  in  prices. ^ 

The  decree  of  May,  1793,  applied  to  grain  and  flour,  and  it 
provided  that  in  each  department  the  price  should  be  the 
average  of  local  market  prices  which  prevailed  from  January 
to  May.  It  was  made  a  penal  offense  for  the  farmers  to  dis- 
tinguish between  payments  in  assignats  and  in  coin.  Thanks 
to  an  abundant  harvest,  the  proletariat  of  the  cities  was  in  a 
measure  supplied  with  bread,  but  the  difTficulties  grew  from 
day  to  day;  farmers  were  inclined  to  keep  their  grain  away 
from  the  markets,  and  in  several  departments  the  enforcement 
of  the  law  was  abandoned  by  the  close  of  August,  1798,  it 
being  generally  recognized  that  this  first  experiment  with  the 
maximum  was  a  failure.^  Popular  uprisings  were  taking 
place  in  different  parts  of  France.  In  Saint  Etienne-en- 
Forez  the  people  killed  one  of  the  monopolists  and  appointed 
a  new  municipality,  which  was  compelled  to  lower  the  price 
of  bread ;  but  thereupon  the  middle  classes  armed  themselves 
and  arrested  many  of  the  rebels."*  The  Paris  Commune, 
having  obtained  large  grants  from  the  convention  for  the 
purchase  of  flour,  succeeded  in  keeping  the  price  of  bread  to 
three  halfpence  a  pound.  The  Commune  was  paying  to  the 
holders  of  wheat  high  prices  at  the  expense  of  the  state.  To 
obtain  bread  at  the  low  price,  people  were  compelled  to  stand 
in  long  line  for  hours,  often  through  the  night,  at  the  baker's 
door.^ 

When  it  came  to  the  reconsideration  of  the  May  measure, 

^  Cambridge  Modern  History,  vol.  8.     The  French  Revolution. 

^  Dr.  Robinet:  Dictionnaire  Historique  et  Biographique  de  la  Revolution  et  de 
r Empire  (1789-18 15),  pp.  543-546. 

'  Bourne:  "Maximum  Prices  in  France,"  American  Historical  Review,  October, 
1917^  p.  no. 

*  Kropotkin:    op.  cit.,  p.  208. 

^  Ibid.,  p.  372. 


8  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

the  Girondins  declared  themselves  as  opposed  to  any  price 
fixing  scheme,  but  their  opposition  was  swept  aside  by  the 
Montagne,  who  considered  that  the  salvation  lay  not  in  the 
retraction  of  the  measure  but  in  its  expansion,  so  that  it  should 
include  all  primary  necessities.  The  extremists  (Varlet, 
Jacques  Rout)  were  agitating  for  the  communalization  and 
nationalization  of  all  commerce,  and  for  the  organization  of  an 
exchange  of  all  goods  at  cost  price. ^  On  September  ii,  1793, 
a  plan  was  adopted  of  fixing  a  uniform  price  for  commodities 
for  the  whole  country,  making  allowances  for  the  cost  of 
transportation.  This  plan  was  soon  abandoned  and  the  law 
of  September  29  promulgated,  decreeing  that  prices  should 
be  local  prices  of  1790,  plus  one-third.  This  system  also 
proved  unworkable,  and  on  November  i  the  convention 
decided  that  prices  should  be  based  upon  those  of  1790  at 
the  place  of  production.  To  these  prices  were  to  be  added 
one-third,  plus  a  rate  per  league  for  carriage  and  five  per  cent 
for  the  wholesaler  and  ten  per  cent  for  the  retailer.'  Public 
authorities  had  a  right  to  compel  farmers  to  bring  grain  to  the 
market,  where  it  could  be  bought  at  the  maximum  price.  A 
study  of  the  situation  shows  that  by  means  of  such  com- 
mandeering or  requisitioning,  French  cities  were  kept  pro- 
visioned with  grain  during  the  last  half  of  1793  and  the  larger 
part  of  1794.  It  is  obvious  that  such  a  system  of  force  could 
be  successful  for  but  a  short  period.  Commandeering  of 
supplies  was  not  conducive  to  keeping  farmers  at  work, 
neither  was  the  provision  of  the  law  setting  definite  margins 
to  distributors  conducive  to  their  staying  in  business.  The 
merchants  had  no  interest  in  buying  at  the  maximum  in  one 
place  and  transporting  commodities  to  another  when  they 
were  obliged  to  sell  at  the  same  price.  Thus  the  accusation 
brought  against  farmers  that  their  greed  defeated  the  law 
was  not  wholly  justified.  Many  of  them  after  they  brought 
their  grain  to  market  were  not  able  to  find  any  one  willing  to 
buy  it.     In  criticizing  the  law  of  the  maximum,  it  is  well, 

'  Kropotkin:  op.  cit.,  p.  373. 

'^  Bourne:  op.  cit.,  p.  112.     See  also  Bourne:  "Food  Control  and  Price  Fixing  in 
Revolutionary  France,"  Journal  of  Political  Economy,  February  and  March,  1919. 


GREAT    BRITAIN  9 

however,  to  remember  that  at  the  time  of  its  promulgation 
the  economic  condition  of  France  was  most  wretched.  Those 
of  the  historians  who  Hke  Levasseur  or  Taine  see  in  maximum 
measures  nothing  but  illustrations  of  violence  and  adminis- 
trative incapacity  overlook  the  enormous  difficulties  under 
which  the  government  of  France  had  been  laboring.  France 
was  blockaded,  attacked  by  the  armies  of  combined  Europe, 
torn  by  internal  dissentions.  France  was  in  a  condition 
where  one  department  distrusted  another  in  the  matter  of 
food  and  where  the  flood  of  paper  money  was  preventing  a 
proper  exchange  of  commodities.  Although  proven  unten- 
able for  any  length  of  time,  the  maximum  seems  to  have  at 
least  partially  succeeded  in  alleviating  the  misery  of  the  urban 
proletariat.  It  is  true  that  food  was  scarce  and  of  poor 
quality  and  that  many  unfortunate  farmers  and  dealers  who 
refused  to  put  their  goads  on  sale  at  legal  prices  were  dragged 
by  sans  cullotes  before  the  Revolutionary  Tribunal  and  put 
to  death,  but  it  is  difficult  to  say  how  many  of  them  would 
have  met  a  similar  fate  without  the  law  and  how  far  the  in- 
furiated mobs  would  have  gone  in  their  work  of  vengeance 
and  destruction  if  no  maximum  was  on  the  statute  books. 

The  temper  of  the  Paris  Commune  may  be  realized  if  one 
reflects  on  the  fact  that  when  in  September,  1793,  the  price 
fixing  law  was  being  discussed  in  the  convention,  the  munici- 
pal council  of  Paris  voted  to  proceed  to  the  convention  in  a 
body  and  demand  the  creation  of  a  "revolutionary  army, 
which  should  march  whenever  necessary  to  thwart  the  ma- 
noeuvres of  egoists  and  forestallers  and  bring  them  to  justice — 
to  force  avarice  and  cupidity  to  disgorge  the  riches  of  the 
earth. "2 

One  of  the  results  of  the  maximum  was  the  growth  of  con- 
traband trade,  which  reached  enormous  proportions.  Butter, 
eggs  and  meat,  particularly,  were  peddled  in  small  quantities 
by  resellers,  and  it  was  practically  impossible  to  control  the 
prices  charged  by  such  persons,  who  "made  their  way  into 

^  Shailer  Mathews:    The  French  Revolution,  p.  247. 

2  Bourne:  "Maximum  Prices  in  France,"  American  Historical  Review,  Octohtty 
1917,?-  113- 


10  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

alleys,  to  the  doors  of  apartments  and  to  the  service  entrances 
of  the  rich."'  The  growth  of  the  contraband  trade  was  one 
of  the  contributing  causes  which  made  the  law  unpopular. 
With  the  defeat  of  the  extremists  in  the  convention  the 
measure  was  doomed.     It  was  repealed  in  December,  1794. 

On  the  American  continent  efforts  to  control  prices  can  be 
traced  to  colonial  days.  Weeden  in  his  Economic  and  Social 
History  of  New  England  relates  of  the  price  of  beaver,  esti- 
mated by  the  governor  and  council  of  New  England  at  6s.  in 
fair  exchange  for  English  goods  at  thirty  per  cent  profit,  with 
the  freight  added. ^  This  was  in  their  opinion  a  normal  value. 
The  scarcity  of  corn,  which  sold  at  los.  "the  strike,"  led  to 
the  prohibition  of  the  sale  of  this  food  to  the  Indians.  Under 
the  pressure  of  this  prohibition,  beaver  advanced  to  los.  and 
20S.  per  pound,  the  natives  having  refused  to  part  with  beaver 
unless  they  were  given  corn.  The  court  was  obliged  to  re- 
move the  fixed  rate,  and  the  price  which  ruled  was  20s. 

Another  fruitless  attempt  at  regulation  referred  to  the 
price  of  labor.  Carpenters,  joiners,  bricklayers,  sawyers  and 
thatchers  were  limited  to  2s.  per  day.  Any  one  who  paid 
more  or  received  more  was  to  be  fined  los.  Sawyers  could 
take  4s.  6d.  for  one  hundred  feet  of  boards,  at  "six  scoore  to  ye 
hundred,"  if  the  wood  was  felled  and  squared  for  them,  with 
Is.  extra  if  they  felled  and  squared  their  own  timber.  Again, 
master  carpenters,  masons,  bricklayers,  were  limited  to  i6d. 
per  day,  plus  board,  and  the  "second  sort"  to  I2d.  These 
regulations  were  enforced  for  about  six  months  and  then  were 
repealed.^  To  offset  fixed  wages,  "the  court  in  1634  limited 
the  rate  of  profit  at  4d.  in  the  shilling  of  cash  cost  in  England 
on  all  importations  of  provisions,  clothing,  tools  or  commodi- 
ties, except  cheese,  wine,  oil,  vinegar  and  liquors,  which  were 
left  free  on  account  of  the  extra  risk  they  occasioned."^  In 
1635  the  statutes  limiting  profits  and  fixing  rates  of  wages 
were  repealed. 

1  Bourne:  op.  cit.,  p.  112. 

^  W.  U.  Weeden:    Economic  and  Social  History  of  New  England,  1620-1789, 
P-97- 

^  Ibid.,  p.  99. 
*Ibid.,  p.  118. 


GREAT    BRITAIN  II 

In  1 711,  when  Walker's  expedition  against  Canada  took 
place,  the  people  of  Boston  were  requested  to  supply  with 
provisions  the  British  fleet  which  sailed  into  that  harbor. 
The  Assembly  ordered  that  the  prices  of  provisions  and  other 
necessaries  of  the  service  should  stand  fixed  at  the  point 
where  they  stood  before  the  approach  of  the  fleet  was  known. 
"Sheriffs  and  constables,  jointly  with  Queen's  officers,  were 
ordered  to  search  all  the  town  for  provisions  and  liquors  and, 
if  the  owners  refused  to  part  with  them  at  the  prescribed 
prices,  to  break  open  doors  and  seize  them.''^  These  measures 
though  ordered  by  their  own  representatives  caused  a  great 
deal  of  discontent  among  the  colonists.  They  expected 
prices  to  rise  with  the  repeal  of  the  enactments,  and  the  com- 
pulsion to  sell  goods  at  low  fixed  rates  was  very  distasteful  to 
them. 

The  farmers,  both  in  revolutionary  France  at  the  time  of 
the  maximum  and  in  the  United  States  during  the  recent 
war  after  the  price  of  wheat  was  fixed,  showed  no  haste  to 
bring  their  produce  to  the  market. 

iParkman:    "A  Half  Century  of  Conflict,"  Boston  Transcript,  April  2,  1918, 
p.  12. 


CHAPTER   II 

Movement  of  Prices  since  Outbreak  of  War 

Since  the  beginning  of  the  war  both  the  general  level  of 
wholesale  and  retail  prices  and  the  absolute  prices  of  specific 
commodities,  whether  necessities  or  luxuries,  have  risen 
steadily  and  to  great  heights. 

Wholesale  Prices 

The  extent  of  the  increase  in  the  average  wholesale  prices 
may  be  ascertained  from  index  numbers  published  regularly 
by  the  Statist,  the  London  Economist,  and  the  Board  of  Trade 
Labour  Gazette. 

The  average  wholesale  prices  of  commodities  as  gauged  by 
the  Statist's  index  number  of  the  prices  of  forty-five  articles 
were  the  same  in  1914  as  in  1913  or  1912.  During  these  three 
years  the  index  figure  stood  at  85,  or  15  per  cent  below  the 
Statist's  standard  period  (1867-1877=100)  and  10  per  cent 
above  the  average  of  the  last  ten  years,  1904-1915.  While 
the  total  for  19 14  does  not  show  any  enhancement  in  the 
general  level  of  prices,  considerable  fluctuation  took  place 
during  the  year  in  the  different  groups  of  commodities  which 
comprise  this  total.  Taking  articles  of  foods  and  materials 
separately,  one  finds  that  the  Index  figure  for  food  rose  during 
the  year  from  77  to  81,  the  largest  Increase,  from  69  to  75,  hav- 
ing taken  place  In  the  vegetable  food,  such  as  corn,  etc. ;  animal 
food  Increased  in  price  much  less  than  it  did  either  in  1912 
or  1913,  rising  only  one  point,  from  99  to  100,  while  the  rise 
was  6  points  In  191 2  and  3  points  in  1913.  Sugar,  coffee  and 
tea  increased  from  54  to  58 ;  with  this  Increase  the  index  figure 
remained  5  points  below  that  of  191 1  and  4  points  below  that 
of  1 912.  There  was  a  drop  In  the  price  of  materials  from  91 
to  88;  minerals  declined  from  iiiln  i9i3to99in  1914;  textiles, 
from  84  in  1913,  to  81  in  1914  (the  index  figure  for  191 1  and 
1912  was  73);  sundry  materials  advanced  4  points  in  1914, 
from  83  to  87,  during  the  two  previous  years  the  figures  being 

12 


GREAT    BRITAIN  1 3 

8l  and  82,  respectively.  The  fall  in  the  price  of  materials 
was  partially  due  to  the  fact  that  there  was  a  decline  in  their 
price  during  the  first  six  months;  this  decline  offset  the 
small  advance  in  the  latter  part  of  the  year.  The  index 
number  for  food  was  74.8  in  June,  1914,  as  compared  with 
75.7  in  December,  I9i3,and  90.9  in  December,  1914;  the  index 
number  for  materials  was  85.7  in  June,  1914,  as  compared 
with  89.8  in  December,  1913,  and  92.1  in  December,  1914.^ 

The  combined  index  number  of  all  commodities  for  191 5 
was  27  per  cent  higher  than  for  19 14  and  191 3.  It  was  8 
per  cent  above  the  standard  period  1 867-1 877  and  32  per 
cent  above  the  average  of  the  years  1906-19 15.  Food  rose 
from  74.8  in  June,  1914,  to  90.9  in  December  of  the  same 
year  and  to  111.4  in  December,  1915,  a  rise  of  49.0  per  cent 
in  the  18  months  of  the  war.  Materials  rose  from  25.7  in 
June,  1914,  to  92.1  in  December,  1914,  and  123.4  ^^  December, 
1 91 5,  a  rise  of  44  per  cent.  The  greatest  increase  in  191 5 
was  in  textiles,  which  advanced  43.6  per  cent.  In  comparison 
with  the  index  number  immediately  prior  to  the  war,  there 
was  an  advance  of  38.6  per  cent  in  textiles  at  the  end  of 
December,  1915. 

The  advance  in  minerals  was  36.3  per  cent  in  1915,  making 
a  total  advance  since  the  beginning  of  the  war  of  40.6  per 
cent.  The  advance  in  vegetable  food  was  29.1  per  cent, 
bringing  the  aggregate  advance  to  76.8  per  cent  since  June, 
1914.  The  rise  in  animal  food  was  less  pronounced,  amount- 
ing to  22.8  per  cent  during  1915  and  to  31.4  per  cent  since  the 
outbreak  of  the  war.  In  the  group  of  sugar,  coffee  and  tea, 
the  rise  was  almost  entirely  confined  to  sugar,  which  rose  in 
1 91 5  about  30  per  cent;  the  advance  for  the  group  was  10.8 
per  cent  for  the  year  and  34.7  per  cent  since  June,  1914. 
Sundry  materials  rose  26.8  per  cent  in  1915  and  50.2  per  cent 
since  the  war  began.  The  rise  was  particularly  great  in  tim- 
ber, linseed  and  indigo.  In  the  aggregate  their  advance  was 
22.5  per  cent  for  the  year  and  since  the  war  began  49  per  cent.' 

'  George  Paish :  "  Prices  of  Commodities  in  1914,"  Journal  of  the  Royal  Statistical 
Society,  March,  1915,  pp.  281-283. 

2  Paish:  "Prices  of  Commodities  in  1915,"  Journal  of  the  Royal  Statistical 
Society,  March,  1916,  pp.  1 79-191. 


14  PRICES    AND    PRICE    CONTROL    DURING   THE   WAR 

In  1 91 6  the  combined  index  number  was  136,  or  26  per  cent 
higher  than  in  1915,  and  60  per  cent  higher  than  in  1914, 
1913  and  1912.  It  was  36  per  cent  above  the  Statist's 
standard  period  1 867-1 877  and  54  per  cent  above  the  aver- 
age of  the  years  1907-19 16.  The  greatest  rise  in  average 
prices  in  191 6,  as  in  191 5,  was  in  textiles,  which  advanced 
during  the  year  39.4  per  cent.  This  advance  was  chiefly  due 
to  the  sharp  rise  in  the  price  of  cotton,  particularly  in  the 
latter  part  of  the  year.  Minerals  rose  during  the  same  period 
26  per  cent  and  sundry  materials  25.4  per  cent.  The  ad- 
vance in  the  average  prices  for  the  total  group  of  materials  in 
1 91 6  was  29.3  per  cent,  as  compared  with  22.1  per  cent  for 
foodstuff's.  There  was  relatively  little  difference  between  the 
increase  in  the  price  of  vegetable  food,  animal  food,  and 
sugar,  coffee  and  tea;  they  rose  22.8  per  cent,  21.1  per  cent 
and  22.7  per  cent  respectively.  The  rise  in  the  average 
prices  over  1913  was  69.3  for  foodstuffs  and  54.1  for  materials.^ 

The  greatest  rise  in  average  prices  in  191 7  was  again  in 
textiles,  which  advanced  49  per  cent;  the  advance,  like  the 
one  of  39  per  cent  in  the  preceding  year,  was  largely  due  to 
the  continuance  of  the  substantial  rise  in  the  price  of  cotton. 
Vegetable  foods  and  sugar,  coff^ee,  and  tea  each  showed  a  rise 
in  price  of  31  per  cent  during  191 7;  sundries  were  28  per  cent 
and  animal  food  was  26  per  cent  dearer.  In  minerals,  because 
of  greater  governmental  control  than  in  other  departments,  the 
rise  in  prices  for  1917  over  those  for  1916  was  only  8  per  cent. 

In  comparing  the  average  prices  for  191 7  with  those  of  the 
prewar  year  1913,  one  finds  that  vegetable  foods  have  shown 
the  most  marked  increase,  one  of  1 50  per  cent,  textiles,  second  in 
the  list,  having  risen  130  per  cent.  Minerals  increased  in  price 
less  than  any  other  group  of  commodities,  the  rise  having 
been  55  per  cent.  This  was  due  in  part  to  a  stricter  system 
of  control  of  minerals  introduced  by  the  government,  in  part 
to  the  fact  that  the  price  of  mineral  in  191 3  was  high,  because  of 
a  coal  strike  in  the  spring  of  that  year.     The  price  of  animal 

*  Editor  of  the  Statist:    "Wholesale  Prices  of  Commodities  in  1916,"  Journal 
of  the  Royal  Statistical  Society,  March,  191 7,  pp.  289-294. 


GREAT   BRITAIN  1 5 

food  rose  between  19 13  and  191 7,  96  per  cent;  the  price  of 
sugar,  coffee  and  tea,  1 1 1  per  cent,  and  that  of  sundry  materi- 
als, 109  per  cent.  Since  1913  the  percentage  rise  for  all  food- 
stuffs was  118,  for  all  materials,  98.  and  the  total  increase  for 
all  groups  of  commodities,  105.^ 

The  annual  figures  of  the  Statist  thus  indicate  that  prices 
rose  from  85  in  1913  and  1914,  to  108  in  1915,  to  136  in  1916 
and  to  174  in  1917:-  The  monthly  figures  show  an  even 
greater  increase  for  the  latter  part  of  191 7  and  the  beginning 
of  1918,  the  December  index  number  having  reached  185. i. 
This  brought  the  average  wholesale  prices  close  to  the  highest 
level  that  has  been  ever  touched  by  them  since  we  have  had 
any  statistical  data  available  for  comparative  purposes. 
The  earlier  the  period  under  consideration,  the  less  reliable 
are  the  data,  but,  assuming  the  correctness  of  Professor 
Jevons's  figures,  the  average  for  1809  was  189  and  for  18 10, 
171,  the  next  highest  level  having  been  reached  in  1818,  when 
the  index  number  was  159.^  >^ 

Since  1913  (the  prewar  year)  monthly  fluctuations  of  the  | 
index  numbers  of  the  45  commodities  included  in  the  Statist's  \ 
list  were  as  follows:  ' 

MONTHLY    FLUCTUATIONS    OF    THE    LNDEX    NUMBERS"    OF    45 

COMMODITIES   1867-77=  ioo< 

1913         1914       1915         1916         1917         1918 

January 86. 4  83.5  96.4  123.6  159  3       186.2 

February 86.4  83.8  100.9  127.0  164.0       187.3 

March 86.7  82.8  103.7  130.4  109.4 

April 86.2  82.3  105.9  134.2  173.0 

May 85.7  82.3  107.2  1354  175.0 

June 84.1  81.2  106.4  131  .0  180.4 

July 84.2  82.4  106.4  13*^^-5  1769 

August 85.0  87.9  107.0  1345  175-7 

September 85.7  89.3  107.8  1344  176.4 

October 84.5  89.8  lio.o  141. 5  180.6 

November 83.3  88.8  113.  i  150.8  i82.g 

December 83.8  91.6  118. 4  154-3  185.  i 

Year 85  85  108  136  174 

■The  twelve  monthly  figures  of  each  year  do  not  in  all  cases  exactly  (at  any 
rate  in  the  decimals)  agree  with  the  annual  averages,  as  the  latter  are  partly 
calculated  from  revised  figures. 

^  Editor  o{  The  Statist:    "Wholesale  Prices  of  Commodities  in    1917,"   Journal 
of  the  Royal  Statistical  Society,  March,  191S,  pp.  334-338. 
'^  The  Statist,  January  19.  1918,  p.  203. 

'  Journal  of  the  Royal  Statistical  Society,  March,  1917,  p.  291. 
*  Ibid.,  March,  I9i'8,  p.  336. 


i6 


PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 


WHOLESALE   PRICES  OF   COMMODITIES   FROM 


No.  of  Articles.  . 


JUNE,    1914,   TO   DECEMBER,    1917^ 
4  19  7  8 


Month 


8  7 

Vege-      Animal 
table      Food 
Food     (Meat 
(Corn,  and 
etc.)     Butter) 


1914 

June  .  . 
July.  .  . 
Aug. .  . 
Sept. .  . 
Oct. .  .  . 
Nov. .  . 
Dec. .  .  . 


66.5 
71.9 
81.9 
87.1 
86.7 
90.6 
93-2 


1915 

Jan 102.3 

Feb 109.3 

Mar 1.05.6 

April 109.0 

May I  ID.  I 

June 103  .0 

July 105.4 

Aug 105.6 

Sept loi  .1 

Oct no. 3 

Nov 1 13 -3 

Dec 1 17. 6 

1916 

Jan 125 

Feb 127 

Mar 122 

April 133 

May 128 

June 120.6 

July 120.4 

Aug 129.4 

Sept 133.6 

Oct 152.3 

Nov 164.0 

Dec 173  I 

1917 

Jan 179  I 

Feb 177 -4 

Mar 187. 1 

April 189.9 

May 186.9 

June 189.6 

July 1741 

Aug 168.0 

Sept 162.5 

Oct 162.9 

Nov 161 .5 

Dec 160.8 


97-5 
101.5 
103.6 
lOI  .0 
100. 1 

98.4 
104.3 


127.8 

137-5 

147 

153 

165 

152 

150.4 

154-7 
146. 1 

154- 1 
156.6 
168.7 


175-8 

184-3 
187.6 
190. 1 

197-5 
206.0 
201 .6 
193-7 
187.7 
189.7 
191 .6 
196.7 


Sugar, 

Coffee,   Food    Miner- 

and  als 

Tea 


107 

0 

64. 

112 

I 

66. 

123 

7 

69. 

125 

0 

71- 

134 

5 

72- 

127 

5 

73- 

130 

3 

72. 

131 

8 

71- 

129 

3 

71- 

123 

4 

67. 

120 

4 

68. 

128 

I 

69. 

51 -8 
50.0 
67.7 
66.9 
65.0 
63-8 
63.0 


72.8 
79.0 
84.8 
87.1 

89-3 
88.2 

86.3 
85-6 
86.0 
90.1 
91 .6 
95-0 

96.6 
100.3 
104.8 

104-5 
105.8 
no. 7 
107.9 
116. 5 
120.5 
131-8 
132.5 
135 -I 


74.8 

96. 

78.2 

94 

86.9 

98. 

88.0 

96. 

87.0 

94- 

87.8 

97- 

90.9 

99- 

96-3 
01.3 
04.7 

07.1 
II  .1 

05-8 

07-7 
08.1 
05.2 
06.2 

06.5 

II. 4 


15 

3 

143- 

20 

8 

149. 

23 

7 

157- 

30 

8 

159- 

33 

9 

157- 

25 

4 

152- 

24 

3 

151- 

29 

7 

154- 

28 

I 

155 

39 

9 

157- 

46 

0 

163. 

55 

0 

158- 

60.5 

63-7 

70.0 
72.0 

73.7 
79.0 

70-3 

66.6 
63.0 
66.2 
66.5 
68.6 


05-3 
09. 1 

15-7 
18.6 
19.6 
26.6 
21 

19 
21 

23 
30 
36 


I 

.2 
•9 
-5 
.0 
.2 

-9 

.8 

■7 
.6 


61.6 
63.0 
65.8 
65.6 

71-4 
70.0 
69.9 
68.9 
67.2 
69.6 
74-5 
73-9 


Tex- 
tiles 


80.6 
83.1 
83.0 
80.9 
82.5 
72.2 
77-8 

82.4 
86.5 

87-3 
88.4 

86.5 
90.6 
89.6 
92.6 

98-3 
100.2 
104.7 
III  .7 


119. 2 
116. 9 

118. 1 
119. o 
119. 8 
122.6 
123.8 
128.9 
130.9 
137.0 
151-0 
150-4 

157-8 
167.7 
174.4 
172.7 
180.6 
200.1 

201 .2 
198.7 
204.1 

213-4 
216.9 
216.5 


II 


Sun- 
dries 


82 
81 
86 

93 
96 

97 
97 


lOI 

I 

105.4  I 

106.3  I 

108.4  I 

107.5  I 

106.2  I 

107. I  I 

107.7  I 

no. 2  I 

114-7  I 

119. 2  I 

123.9  I 

128.8  I 

131 

I  I 

133 

5  I 

135 

2  I 

135 

9  I 

133 

7  I 

132 

6  I 

133 

8  I 

134 

I   I 

137 

5  I 

150 

5  I 

152.9  I 

156.9  I 

162 

5  I 

165 

2  I 

179 

7  I 

175 

4  I 

175 

3  I 

175 

2  I 

179 

I  I 

185 

4  I 

188 

7  I 

191 

9  I 

197 

8  I 

26 


Mate- 
rials 


-7 
■5 
.6 
.2 

-7 
.6 
.1 


96.5 

00.6 

03.0 

05.0 

04. 

06. 

05- 

06. 

09. 

12. 

17.9 

23-4 


•5 

85 

•7 

85 

•4 

88. 

.2 

90. 

.8 

91- 

.1 

89. 

7 

92. 

•3 
9 
•5 
•3 
.6 

-7 


29 

31 
35 
36 
36 
35 
35 
37 
38 
42 
54 
53 


58.3 
64-3 
68.2 

73-8 
76  o 

81.5 
81.8 
82.4 
86.2 
91. 1 
94  9 
97-1 


^  Journal  0}  the  Royal  Statistical  Society,  March,  191 8,  p.  340. 


GREAT    BRITAIN 


17 


The  two  following  tables  show  by  groups  of  commodities 
the  changes  which  have  occurred  during  the  past  five  years, 
the  first  table  giving  a  comparison  of  the  annual  index  num- 
bers, the  second  of  the  numbers  at  the  close  of  each  year. 

COMPARISON  OF  WAR  AND  PREWAR  ANNUAL  INDEX  NUMBERSi 


No.  of 
Articles 

8         Veg.  food . 


Annual  Index  Numbers 
1917  1916  1915  1914  1913 


7 
4 

19 

7 

8 

II 

26 


Animal  food 
Sugar,     coffee 

and  tea 
Foodstuffs 
Minerals  . 
Textiles.  . 
Sundries  . 
Materials 
Total 


174 
192 

113 

172 
192 

174 
179 


133 
152 

86 
130 
158 
129 
136 
140 
136 


108 
126 

70 
107 
126 

92 
109 
108 
108 


Increase  % 

1916  on 
1915   1913 


75 
100 

58 
81 

99 

81 

87 
88 

85 


69   +22.8   +92 
99   +21. 1    +53 

54   +22.7   +61 

77 
III 


+22.1   +69 
+26.0  +44 


84  +39-4  +53 


83 
91 

85 


+25-4 
+29-3 
+26.3 


+63 

+54 
+59 


Increase  % 

1917  on 
1916     1913 

I    +31    +150 
5   +26     +96 


+31 
+29 

+8 

+49 
+28 
+28 
+28 


+  111 
+  113 

+55 
+  130 
+  109 

+98 
+  105 


COMPARISON  OF  WAR  AND  PREWAR  MONTHLY  INDEX  NUMBERS^ 

Increase  % 
Dec,  1917  on 


1917 

No.  of  (Dec. 

Articles  31) 

8  Veg.food 160.8 

7  Animal  food 196.7 

4  Sugar,  coffee  and  tea  135.  i 

19  Foodstuffs 168.6 

7  Minerals 173-9 

8  Textiles 216.5 

II  Sundries 197-8 

26  Materials 197 .  i 

45  Total 185. 1 


Index  Numbers 

1916  1915  1914 

(Dec.  (Dec.  (Dec. 

31)  31)   31) 

173. I  117. 6 

168.7  128. I 

95.0  69.8 


155.0  III. 4 
158.9  136.0 
150.4  III. 7 
152.9  123.9 


153-8 
154-3 


123-4 
118. 4 


93-2 
104.3 
63.0 
90.9 
99-8 
77-8 

97-7 
92.1 
91 .6 


1914 
(June 

30) 

66.5 

97-5 
51-8 
74-8 
96.7 
80.6 
82.5 

85-7 
81.2 


1916 
(Dec. 

31) 
-7-1 
+  16.6 

+42-2 
+8.8 

+9-4 
+43-9 
+29-3 
+28.1 
+20.0 


1914 
(June 

30) 
+  141. 6 
+  101. 7 
+  161 .2 
+  125.2 

+79-9 
+  168.5 
+  139-6 
+  129-8 
+  128. 1 


The  index  numbers  of  the  Economist  tell  a  similar  story. 
The  general  level  of  prices  rose  from  116. 6  at  the  end  of  July, 
1914,  to  149. 1  for  the  same  date  in  1915,  to  191. i  in  1916, 
to  254.4  '^^  191 7  and  to  265.7  on  the  last  day  of  December, 
191 7.  The  advance  continued  through  191 8  and  in  April 
the  index  number  reached  270. o.^  How  each  group  of  com- 
modities, according  to  the  Economist,  contributed  to  the  rise 
may  be  seen  from  the  two  tables  which  follow.  The  first 
table  gives  the  rise  in  points  for  yearly  periods,'*  the  second 
indicates  the  monthly  fluctuations.^ 

^  Journal  of  the  Royal  Statistical  Society,  March,  1917,  p.  290;  and  March,  1918, 
P-  338. 

*  The  Statist,  January  19,  1918,  p.  103;  or  Journal  of  the  Royal  Statistical  Society, 
March,  1918,  p.  339. 

^  The  Economist  (London),  May  4,  1918,  p.  702. 

*  Ibid.,  February  16,  19 18,  p.  258. 

*  Ibid.,  May  4,  1918,  p.  702. 


i8 


PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 


Group 

total 

at  July 

31,  1914 


Cereals  and  meat. .  579 

Subsidiary  food .  . .  352 

Textiles 6165 

Minerals 4645 

Miscellaneous  ....  535 

Total  index  number  2,565 

•  Decline. 


From 

July  31. 

1914,  to 

Dec.  31, 

1914 

Points 

135 
62 1 
°-i07i 
Hi 

133^ 

235 


Rise  during  Periods 


From 
Dec.  31, 
1914,  to 
Dec.  31, 

1915 
Points 

183 
3^ 
222 

2352 
162 

834 


From 

Dec.  31, 

1915.  to 

Dec.  31, 

1916 

Points 

397 
107 

393^ 
112 

263I 

1,273 


From 

Dec.  31, 

1916,  to 

Dec.  31, 

1917 

Points 

72 
133 
560 

15 
236^ 

937 


From 

July  31. 

1914,  to 

Dec.  31, 

1917 

Points 

707^ 

334 
1,068 

375 
795^ 
3,280 


Date 


Basis  (average  1901-5) 

Jan.  I,  1914 

April  I,  1914 

July  I,  1914 

End  July,    1914 

■     Aug.       "     

Sept.      "     

Oct.        "     

Nov.      " 

Dec.       "     

Mar.,  1915 

June       "     

Sept.      "     

Dec.       "     

Mar.,  1916 

June       "     

Sept.      "     I 

Dec.       "     I 

Jan.,    1917 I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 


Produc 
ar,  etc.^ 

u 

g 

c 

s 

Sh 

U 

-a 

-a  t« 

0    -^> 

G 
U 

Other  Foo 
(Tea,  Su 

c 

Miscellane 
(Rubber 
Oils,  etc 

"cfl 

c 

1 

Feb. 

Mar. 

April 

May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Jan.,    1918 I 

Feb.        "     I 

Mar.       "     I 

April      "     I 


500 

563 
560 

565^ 

579 

641 

646 

656^ 

683 

714 

840 

818 

809  i 

897 

9495 

989 

,018 

,294 
,310 
,312^ 

-346 

,362 

,376i 

.432| 

,3332 

-342 

,221^ 

,2265 

,2362 
,286i 

,22li 

.235 
,238 

,244 


300 

355 

350I 

345 

352 

369 

405 

400  i 

4071 

4145 

427 

428 

4705 
446 

503 
520 

536i 

563 

561 

58ii 

610J 

642 

648 

652I 

607 

670 

726 

724 

679 

686 

686 

693 
697 

7442 


500 

642 

626I 

616 

616^ 

626 

6iii 

560 

512 

509 

597 

601 

667 

731 
796I 
794 
937 
.1245 
,137 
,189 
,226 
,240 
,2611 

,441 

,512 

,504! 

,509i 

,575^ 

,660^ 

,6841 

,7195 

,733 

,777 

,760 


400 

491 

493 

4715 

4642 

474 

4725 

458 

473 

476 

644 

624 

6195 

7115 

851 

895 

858^ 

824^ 

825^ 

829I 

834i 
842 

8395 
841  i 
840 
830 

822I 

824 

848 

839I 
829 

838 
836 
850 


500 
572 
567 
551 
553 
588 

645 
657 
684^ 
6861 
797 
779 
769! 
848^ 
913 
1,015 
1,073 
1,112 

1,1195 
1,1595 
1,283 

1,293 
1,286^ 

1,278^ 

1,296^ 

1,3115 

1,3545 

1,351 

1,344^ 

1,3482 

1,329 

1,319 

1,319 

1,3425 


2,200 
2,623 
2,597 
2,549 
2,565 
2,698 
2,780 
2,732 
2,760 
2,800 

3,305 
3,250 
3,336 
3,634 
4,013 
4,213 
4,423 
4,908 

4,953 
5,072 
5,300 

5,379 
5,412 
5,646 
5,589 
5.658 
5,634 
5,701 
5.768 
5.845 
5.785 
5,818 

5.867 
5.941 


1 00-0 
1 19-2 
1 18-0 

115-9 
1 16-6 
122-6 
126-4 
124-2 

125-5 
127-3 
150-2 

147-7 
1 5 1-6 
1 65-1 
182-4 

191-5 
201-0 
223-0 
225-1 
230-5 
240-9 
244-5 
246-0 
256-6 
254-4 
257-1 
256-1 

259-1 
262-2 

265-7 
262-9 
264-4 
266-6 
270-0 


GREAT    BRITAIN 


19 


200 


IQO 


The  Economist,  February  16,  1918,  p.  259. 


The  two  preceding  tables  and  the  chart  show  that  the  price 
of  cereals  and  meat  rose  steadily  until  December  31,  191  f,  the 
increase  having  been  particularly  pronounced  during  the  lat- 
ter year.  The  prices  fell  sharply  in  the  late  summer  of  191 7  on 
the  institution  of  the  nine  penny  loaf  and  controlled  beef  and 
mutton  quotations.     But  even  this  group  was  creeping  up 


20  PRICES   AND   PRICE   CONTROL  DURING  THE   WAR 

again  before  the  end  of  the  year.  Until  the  beginning  of  191 6 
there  was  a  comparatively  slow  advance  in  the  price  of  sub- 
sidiary foodstuffs;  since  then,  however,  a  more  rapid  rise  took 
place.  The  price  of  textile  materials,  particularly  of  cotton, 
declined  during  the  first  few  months  of  the  war,  but  a  reaction 
towards  higher  prices  set  in  in  1 91 5  and  continued  through 
1916  and  1917,  the  rise  having  been  particularly  rapid  during 
the  latter  year.  This  placed  textiles  at  the  head  of  the  Econ- 
omist's list,  while  they  occupy  the  second  place  according  to 
the  calculations  of  the  Statist;  however,  the  Statist's  figures 
for  December,  191 7,  show  for  textiles  also  the  greatest  ad- 
vance over  the  prices  on  June  30,  19 14.  The  price  of  minerals 
was  hardly  affected  during  the  early  stages  of  the  war,  the 
greatest  increase  occurring  in  191 5  and  1916,  when  the  price 
rose  347I  points,  as  compared  with  only  15  points  for  1917. 
The  miscellaneous  group,  which  includes  leather,  rubber,  oils, 
showed  a  sharp  rise  upon  the  declaration  of  war  and,  with 
the  exception  of  slight  declines  in  the  summers  of  191 5  and 
1 91 7,  the  increase  in  price  for  this  group  has  been  continuous. 

In  percentages,  the  least  increase  appeared  in  metals,  which 
rose  82.5  per  cent,  and  the  greatest  increase  in  textiles, 
which  rose  169.3  P^r  cent.  The  cereal  and  meat  group  went 
up  113. 8  per  cent  and  other  foodstuffs  92.9  per  cent.^ 

The  index  numbers  of  the  Board  of  Trade  are  based  upon 
the  price  movements  of  forty-seven  principal  articles,  weighted 
in  accordance  with  their  estimated  consumption  in  1 881-1890. 

The  results  of  the  Board  of  Trade  calculations  for  the  past 
five  years  were  as  follows: 

^  Labour  Gazette  (Canadian),  January,  1918,  p.  46. 


GREAT    BRITAIN 


21 


Year 


THE  BOARD  OF  TRADE  (UNITED  KINGDOM)  INDEX  NUMBERS  OF 
WHOLESALE   PRICES  OF  47  ARTICLES! 

(Base  Year  1900=100) 

Textiles 

(Raw 
Materials) 
1350 

135  I 
116. 8 
128.8 
119. 8 
180. 1 
270.1 

The  miscellaneous  group  comprises  such  articles  as  petroleum,  paraffin  wax,  cot- 
ton seed,  wood  and  timber. 


Coal 

and 

Metals 

1913 92-5 

19 14  (January-July) 86.2 

1914  (August-December) .  88.8 

1914  (Year) 86. 

1915 

1916 

1917 


116 

165 

182 


Drink 

Articles 

and 

Miscel- 

Com- 

Tobacco 

laneous 

bined 

117. 7 

109.4 

116. 5 

114. 8 

106.2 

113. 6 

1304 

119. 1 

122.6 

120.9 

III. 3 

117. 2 

1541 

143.8 

143-9 

189.4 

204.4 

186.5 

246.1 

256.0 

242.9 

In  the  coal  and  metals  group  the  greatest  rise  occurred  in 
1 91 6,  when  there  was  an  increase  of  42  per  cent  over  the  figure 
for  1915.  In  1917  the  index  number  was  10  per  cent  higher 
than  in  191 6.     Zinc  and  lead  show  decreases  compared  with 

1 916,  while  the  other  items  in  the  group  increased  in  price. 
The  figures  for  textiles  (raw  materials)  show  an  average 

rise  of  about  50  per  cent  in  191 6  over  1915  and  of  50  per  cent 
again  in  191 7  over  191 6.  This  was  due  principally  to  ad- 
vances in  the  price  of  raw  cotton  and  flax,  which  increased 
74  per  cent  and  71   per   cent,  respectively,   in   1916  and  in 

1917.  The  index  number  for  the  group  relating  to  food, 
drink  and  tobacco  increased  by  nearly  30  per  cent  over  the 
number  for  1916,  each  of  the  items  in  the  group,  except  cocoa 
and  hops,  contributing  to  the  increase. 

In  the  group  of  miscellaneous  items,  petroleum  shows  a 
decrease  of  6  per  cent  and  rubber  an  increase  of  less  than  one- 
half  of  I  per  cent.  The  other  items  show  large  increases, 
ranging  from  22  per  cent  to  45  per  cent,  the  figures  for  the 
whole  of  the  group  representing  an  increase  of  25  per  cent  over 
those  for  the  previous  year. 

Comparing  the  figures  for  191 7  with  those  for  1913,  it  will 
be  seen  that  there  was  a  rise  of  97  per  cent  in  the  index  num- 
ber of  the  coal  and  metals  group,  of  100  per  cent  in  textile 
raw  materials,  of  109  per  cent  in  the  food,  drink  and  tobacco 


^Labour  Gazelle  (British),  January,  1918,  pp.  6-7. 


22  PRICES   AND   PRICE   CONTROL   DURING   THE   WAR 

group  and  of   134  per  cent  in  the  group  of  miscellaneous 
materials,  the  general  index  number  showing  a  rise  of  108.5 

per  cent.^ 

The  yearly  average  wholesale  prices  of  commodities  con- 
sidered in  the  Statist's  groups  fluctuated  since  191 3  (the  pre- 
war year)  as  follows  i^ 

1913       1914       1915       1916       1917 

Vegetable  Food: 

(  English  Gazette,  s.  and  d. 

Wheat:  {      per  qr 31-9 

[  American,  s.  and  d.  per  qr. .  .   36 . 5 

fTown     made,     white     (now 
Flour:  \      "G.R.")  s.  per  sack  (280 

[      lbs.) 3O2 

T,     ,         /  English  Gazette,  s.  and  d. 

Barley:  {      p^er  qr 27.3 

Oats:  English  Gazette,  s.  and  d.  per  qr.   19 .  i 
Maize:  American  mixed,  s.  per  qr. .  .  .   23I 
Potatoes:"  Good  English,  s.  per  ton.  .   78 
T,.       /  Rangoon  cargoes  to  arrive,  s. 
^'^^•\      andd.  percwt 8.2 

Animal  Food: 

n     r,   /  Prime,  d.  per  8  lbs 54 

^^^'     1  Middling,  d.  per  8  lbs 49 


-K/i   4.4.         /  Prime,  d.  per  8  lbs 62 

Mutton:  |  Middling,  d.  per  8  lbs..  .  .    56 


35-0 
40.1 

53 -ir 
59-10 

58-5 
67.7 

75-9 
85-3 

335 

49 

52I 

58^ 

27.2 
21 .0 
29I 

7ii 

37-4 
30.9 
415 
93 1 

51-7 
33-5 

52f^ 

1535 

64.10 

7if, 
186^ 

9-1 

13-3 

16.10 

25-3 

56i 

64 
57I 

72i 

67i 
75i 
69! 

8ii 
76f 
935 
86^ 

104I 

lOI 

182 
199 

75f 

72 
93? 

87f 
109I 

212 
191 

Sugar: 


Tj    1       /  Large  and  small,  average,  d 

^°''^-    \      per  8  lbs 55 

Bacon:  Waterford,  s.  per  cwt 77 

r,    . .        /  Friesland,  fine  to  finest,  s. 

^"""-   \      percwt 119  120  141  191  173 

Sugar,  Coffee  and  Tea: 

f  British  West  India  refining,  s. 

percwt 95  "f  hI  24!  ,31^ 

Beet,  German,  88  p.  c,  f.  o.  b., 

s.  percwt 9i  I2|  •17I  "=221  '25^ 

Java,  floating  cargoes,  s.  per 

cwt io|  I3f  i8f  26I  32f 

1913  1914  1915  1916          1917 
Sugar,  Coffee  and  Tea  (Cont.) : 

f  Ceylon  plantation,  low  mid- 
Coffee:    ]       dling.d  s.  percwt 81  79  78J  77!           945 

[  Rio,  good,  s.  per  cwt 53  45  435  50             58^ 

'  Congou,  common,  d.  per  lb. .  .      56  8|  8  i6g 

Indian  good  medium,  d.  per  lb.  8  J  8f  io§  lof 
Average  import  price,  d.  and 

dec.  per  lb 9.06  9.19  11. 01  11.29     •14.68 

•  The  annual  prices  are  the  average  monthly  or  weekly  quotations,  except 
potatoes,  which  are  the  average  weekly  quotations  during  the  eight  months  Jan- 
uary to  April  and  September  to  December. 

•>  Meat  (9-13),  by  the  carcass,  in  the  London  Central  Meat  Market. 

*  Comparative  values. 

^  East  India  good  middling  from  1908. 

•  Approximate. 

^  Lbbour  Gazelle  (British),  January,  1918,  p.  6. 

*  Journal  of  the  Royal  Statistical  Society,  March,  1918,  pp.  344-349. 


Tea: 


GREAT    BRITAIN 


23 


Iron: 


Minerals: 

Scottish  pig,  s.  and  d.  per  ton  . 
Cleveland      (Middlesbrough) 

pig,  s.  and  d.  per  ton 

Bars,  common, £  per  ton 

f  Chili  bars,  £  per  ton 

Copper: -^  English  tough,  cake,   £  per 

[      ton 

Tin:  Straits,  £  per  ton 

Lead:  English  pig,  £  per  ton 

Wallsend  Hetton  in  London, 

s.  per  ton 

Newcastle  steam,  s.  per  ton .  . 
Average  export  prices,  s.  and 

dec.  per  ton 

Textiles: 

(  Middling  American,   d. 

Cotton:  \      lb 

[  Fair  Dhollerah,  d.  per  lb. .  .  . 

Petrograd,  £  per  ton 

Russian,  average  import  price, 

£  per  ton 

Manila  fair  roping,  £  per  ton 
Petrograd  clean,  £per  ton.  . 
Jute:  Good  medium,  £  per  ton 


Coal: 


65.6 

58.3 
7f 
68 

73i 
201 

i5§ 


per 


Flax: 


I 


Hemp: 


57  I 

51.0 
7 

64i 
151 

i9i 

2li 

Hi 


71 .2 


90.0 


65.2         84.0 


loj 

/24 


82i 
164 
24 

2li 


I3f 
Ii5f 


134 
182 

321 

•=27^ 
41I 


95-7 

89.7 

13I 

124! 

136J 

238 

321 

30 


13.94       13-65       16.96       24.64       27.16 


7.01 

6.41 

5.87 

9.00 

16.55 

5U 

4tV 

"^K 

7 

I3f 

34 

33 

59l 

76f 

ii3i 

4i\ 

38 

661 

85i 

«i5i| 

3ii 

261 

4ii 

54f 

84f 

38 

43 

60  i 

71 

105^ 

26| 

27i 

211 

31 

39f 

Wool: 


Hides: 


Leather: 


1913 
Textiles  (Cont.): 

Merino  Port  Philip  average 

fleece,  d.'  per  lb 18 

Merino     Adelaide,     average 

grease,  d.  per  lb 9^ 

English,   Lincoln   half  hogs, 

d.  per  lb I2f 

Silk:  Tsatlee,  s.  per  lb 11 

Sundry  Materials: 

River  Plate  dry,  d.  per  lb. .  .  I2| 

River  Plate  salted,  d.  per  lb.  9^ 
Average    import    price,    d. 

and  dec.  per  lb 8  .62 

f  Dressing  hides,  d.  per  lb. .  .  19^ 
j  Average  import   price,   d. 

[      per  lb I9j 

Tallow:  Town,  s.  per  cwt 34! 

f  Palm,  £  per  ton 35  j 

Oil:  -I  Olive,  £  per  ton 49 J 

[  Linseed,  £  per  ton 24! 

Seeds:  Linseed,  s.  per  qr 45I 

Petroleum:^  Refined,  d.  per  gall 85 

Soda:  Crystals,  s.  per  ton 47^ 

Nitrate  of  Soda:  s.  per  cwt .  11^ 

Indieo-  /  bengal  good  consuming,  s. 

^   '  \      per  lb 2f 

Hewn,      average     import 

price,  s.  per  load 40 

Sawn  or  split,  average  im- 
port price,  s.  per  load ...  63 

*  Approximate. 

'  Port  Philip  fleece  washed  nominal  since 
value  of  clean  wool. 

«  Petroleum  as  compared  with  the  average 


1914 


Timber: 


9l 


I2f 

io| 


I3i 
9^ 

9. II 

2li 


I9I 

3^ 
37f 
50f 
24I 
48! 
7A 
475 
loi 


5f 
41I 


64^ 


1915 


2lt 


10^ 


I7f 
9if 


13 
II 

10.04 

28| 

2lf 

36I 

34U 

5a 

3oi 

57l 

m 

48f 

I2| 


I3f 


58I 
94J 


1916 


325 


16^ 

20 
i6i 


I4f 
I3i 

II  .70 

28i 

27 

46i 

442 

59i 

4ii 


12 

78f 
17I 


I3f 


82  i 
148J 


1917 

46 1 
23s 


20| 
2l4 


20 
16 

15    52 

35 

342 

62i 

46 

115I 

56^ 

II2i 

i6i 
89f 

25 


loi 


97l 


210 


1895,  exactly  in  proportion  with  the 
from  1873-77  only. 


24  prices  and  price  control  during  the  war 

Retail  Prices 

Food 

The  records  of  retail  prices  of  food  paid  through  the  United 
Kingdom  in  cooperative  stores  and  other  shops  largely  patron- 
ized by  the  working  people  are  collected  by  the  Board  of 
Trade  and  summarized  month  by  month  in  the  Labour  Gazette. 
It  is  to  be  regretted  that  no  complete  detailed  data  are  given 
regarding  actual  retail  prices  of  various  commodities,  the 
monthly  tables  presenting  but  average  percentage  increase 
since  July,  1914,  and  the  text  commenting  on  price  fluctua- 
tions of  selected  articles.^ 

Retail  prices  of  food  began  to  move  upward  on  August  i, 
1914,  and  by  August  8  they  rose  as  much  as  15  or  16  per  cent 
above  the  "normal  prices  in  July."^  After  that  there  was  a 
fall  in  the  price  of  most  articles,  so  that  at  the  beginning  of 
September  the  average  increase  was  approximately  10  per 
cent,  but  by  December,  1914,  the  increase  reached  again  16 
per  cent.  To  some  extent,  the  advance  was  due  to  sea- 
sonal changes,  as  such  articles  as  eggs  and  butter  always  be- 
come dearer  towards  winter.  The  greater  part  of  the  rise, 
however,  must  be  attributed  to  other  causes.  The  average 
percentage  increase  at  the  end  of  the  year  191 5  was  45  above 
the  prices  prevailing  immediately  before  the  war.  The  great- 
est rise  took  place  in  the  latter  part  of  1916,  making  the  price 
level  towards  the  end  of  that  year  about  87  per  cent  higher 
than  it  was  in  July,  1914.  Prices  continued  to  advance  until 
July,  1917,  when  the  recorded  increase  was  104  per  cent; 
since  then,  with  the  exception  of  a  decline  in  September, 
there  has  been  very  little  change.  The  decline  was  caused  by 
the  fixing  of  maximum  prices  for  certain  staple  foods  and, 
as  can  be  seen  from  the  following  figures,  was  of  very  short 

1  The  Board  of  Trade  figures  are  based  upon  between  500  and  600  returns  of 
predominant  prices,  relating  to  prices  in  a  number  of  shops  in  every  town  in  the 
kingdom  with  over  50,000  population,  in  about  200  towns  with  populations  from 
10,000  to  50,000  and  in  about  250  smaller  places.  The  articles  included  are  beef 
and  mutton  (British  and  imported),  bacon,  fish,  flour,  bread,  tea,  sugar,  milk, 
butter,  cheese,  margarine,  eggs  and  potatoes. 

*  Labour  Gazette,  January,  1915,  p.  6. 


GREAT    BRITAIN  2$ 

duration.  The  average  percentage  increase  in  retail  prices 
of  the  principal  articles  of  food  from  month  to  month  since 
the  beginning  of  the  war  was  as  follows:^ 

Month  (beginning  of)  1914           1915  1916  1917 

January 18  45  87 

February 22  47  89 

March 24  48  92 

April 24  49  94 

May 26  55  98 

June 32  59  102 

July 325  61  104 

August 15                 34  60  102 

September 10                35  65  106 

October 12                 40  68  97 

November 13                 41  78  106 

December 16                 44  84  105 

Taking  up  the  various  commodities  included  in  the  Board 
of  Trade  averages,  one  finds  that  the  prices  of  British  meat 
have  not  shown  much  increase  during  the  latter  part  of  1914, 
but  imported  meat  has  become  much  dearer  than  before  the 
war.  Percentage  increase  since  July,  1914,  was  on  January  i, 
1915,  for  chilled  or  frozen  beef  ribs,  18,  thin  flank,  32  (these 
are  increases  which  took  place  in  large  towns).  The  prices  of 
British  meat  advanced  steadily  in  the  early  months  of  1915; 
at  the  beginning  of  May  they  reached  an  increase  of  about  20 
per  cent  above  those  which  prevailed  in  July,  1914.  During 
May  there  was  an  advance  of  about  14  per  cent,  and  an 
additional  rise  of  6  per  cent  took  place  in  June.  The  fluctua- 
tions were  not  very  great  during  the  second  half  of  the  year. 
The  course  of  prices  of  imported  meat  was  somewhat  similar, 
but  the  proportionate  increase  was  10  to  15  per  cent  greater. 
The  year  191 6  opened  with  butchers'  meat  averaging  retail 
about  3d.  per  pound  above  the  level  of  prices  in  July,  1914, 
and  during  the  first  three  months  of  the  year  there  was  a 
steady  upward  movement  in  prices. 

During  April  and  May  there  occurred  a  very  marked  general 
rise;  the  average  increase  in  price  was  about  15  per  cent, 
varying  from  i|d.  per  pound  for  the  cheapest  cuts  of  imported 
meat  to  nearly  2d.  per  pound  for  ribs  of  British  beef.    From 

^Labour  Gazette,  December,  1917,  p.  438;  also  The  Economist,  February  16, 
1918,  p.  258. 


26  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

June  I  to  December  i,  1916,  there  was  very  little  movement 
in  meat  prices;  they  averaged  about  5|d.  per  pound  above 
those  of  July,  1914.  Farther  advances  of  2  to  3  per  cent  took 
place  during  December  and  on  January  i,  1917,  average  per- 
centage increase  since  July,  19 14,  was  from  64  for  British  beef 
ribs  to  loi  for  imported  thin  flank.  Prices  of  British  meat  in- 
creased by  about  3! d.  per  pound  between  the  beginning  and  the 
summer  of  1917;  in  July  of  that  year  advances  in  price  ranged 
from  TOO  to  over  190  per  cent  in  comparison  with  July,  1914, 
which  was  equivalent  to  average  increases  of  7^d.  to  lo^d.  per 
pound,  according  to  cut.  As  may  be  noted,  in  1915,  1916  and 
in  191 7  up  to  September,  prices  showed  a  continuous  rise  dur- 
ing the  first  half  of  the  year,  followed  by  comparatively  little 
change  during  the  second  half.  In  191 7  the  action  of  the  Food 
Controller  resulted  in  a  substantial  decrease  in  the  price  of 
British  beef  and  mutton  after  September  i.  It  declined  to  the 
extent  of  about  2^d.  per  pound,  so  that  prices  at  December 
I,  1917,  were  7d.  per  pound  above  the  level  of  July,  1914. 
With  imported  meat,  the  increase  during  the  summer  and 
the  subsequent  decrease  since  September  were  less  than  with 
British  meat,  the  decrease  amounting  to  about  f  d.  per  pound. 
The  price  of  bacon  was  on  August  8  about  15  to  20  per  cent 
above  that  of  the  previous  month ;  after  this  rise  it  showed  an 
almost  continuous  decline  until  the  end  of  November,  1915; 
between  then  and  January  i  the  price  recovered  so  that  at 
January  i,  191 6,  the  percentage  increase  was  about  31.  Bacon 
rose  in  price  very  little — less  than  id.  per  pound,  or  about  5 
per  cent,  during  the  first  seven  months  of  1916.  In  August, 
however,  there  was  a  5  per  cent  increase,  the  advance  contin- 
uing so  that  prices  at  the  end  of  191 6  were  56  per  cent  higher 
than  in  June,  1914.  The  advance  was  very  pronounced  in 
1917,  being  especially  accelerated  during  August-October,  so 
that,  while  the  increase  from  April,  1915,  to  July,  1917, 
averaged  about  \d.  a  pound  per  month,  in  the  three  above 
mentioned  months  in  191 7  it  averaged  ifd.  per  month.  The 
total  increase  during  191 7  was  about  9d.  per  pound  and  on 
January  i,  1918,  the  percentage  level  was  139  above  July,  1914. 


GREAT   BRITAIN  2/ 

There  were  considerable  fluctuations  in  the  price  of  fish;  on 
January  I,  1915,  the  prices  showed  an  increase  since  July,  1914, 
of  51  per  cent  for  large  towns,  and  of  31  per  cent  for  small  towns 
and  villages.  The  prices  rose  steadily  throughout  the  year. 
At  January  i,  the  increase  over  July,  1914,  reached  97  per 
cent.  It  went  up  to  105  per  cent  at  the  beginning  of  February. 
Then  a  decline  set  in  and  in  July,  1916,  fish  sold  at  about  80 
per  cent  above  the  level  of  two  years  earlier,  being  the  lowest 
point  reached  during  the  year.  A  subsequent  rise  brought 
the  price  up  to  97  per  cent  over  the  July  prewar  level.  The 
movements  in  the  price  of  fish  were  irregular  through  191 7, 
but  the  tendency  was  always  upwards,  and  since  August 
successive  advances  brought  the  prices  to  nearly  treble  of 
what  they  were  in  July,  19 14. 

There  was  a  sharp  rise  in  the  price  oi  flour  in  1914,  the  ad- 
vance having  amounted  to  about  20  per  cent  by  the  end  of 
the  first  week  in  August.  As  in  the  case  of  sugar,  prices  fell 
after  the  panic  ceased  and  then  rose  again,  so  that  at  January 
I  they  reached  once  more  the  20  per  cent  increase  over  the 
level  in  July.  Bread  increased  only  half  as  much  as  flour  at 
the  beginning  of  August  (11  per  cent),  the  advance  by  the  end 
of  the  month  being  8  per  cent.  As  with  flour,  no  important 
changes  took  place  then  until  November,  but  during  Novem- 
ber and  December  there  was  a  rise  amounting  to  5  to  6  per 
cent,  so  that  at  January  i,  191 5,  bread  was  about  16  per  cent 
higher  than  in  July,  1914.  The  prices  of  both  flour  and  bread 
increased  sharply  during  January  and  February,  1915,  the 
increase  continuing,  though  less  rapidly,  up  to  a  maximum 
at  the  beginning  of  June,  when  flour  was  about  55  per  cent 
and  bread  45  per  cent  dearer  than  just  before  the  war.  Prices 
then  declined  until  November,  but  during  the  last  two  months 
of  the  year  upward  movements  were  resumed.  The  average 
price  of  bread  at  the  beginning  of  1 9 1 5  was  6|d.  for  4  pounds ;  on 
June  I  it  reached  8^d.  and  on  January  i  it  fell  to  8jd.,  as  com- 
pared with  5fd.  in  1914,  before  the  war.  In  the  first  eight 
months  of  191 6  the  price  fluctuated  between  8jd.  and  9d.  per 
4  pounds.    Subsequent  increases  brought  the  average  to  9|d. 


28  PRICES    AND    PRICE   CONTROL    DURING   THE    WAR 

at  November  i  and  lod.  at  December  i.  Expressed  in  per- 
centage form,  the  price  of  bread  at  the  end  of  1916  was  73 
per  cent  above  the  level  of  July,  19 14;  at  the  end  of  191 5  it 
was  about  42  per  cent  above  this  level.  The  retail  prices  of 
flour  advanced  proportionately  more  than  those  of  bread 
during  the  year,  viz..,  from  49  per  cent  at  January  i,  191 6,  to 
88  per  cent  at  January  i,  191 7,  above  the  prices  prevailing 
immediately  before  the  war.  The  average  price  of  bread  rose 
from  about  lod.  per  4  pounds  on  January  i,  191 7,  to  ii^d.  in 
May,  after  which  it  remained  almost  stationary  until  the 
introduction  of  the  subsidized  9d.  loaf  on  September  17. 
The  movements  in  the  price  of  bread  corresponded  to  those  of 
flour. 

The  14  per  cent  increase  in  the  price  of  tea  at  January  i, 
1915.  was  caused  by  the  increase  in  the  duty  (3d.  per  pound 
in  November,  1914).  From  January  to  September,  1915,  the 
aggregate  increase  was  nearly  3d.  per  pound  or  50  per  cent 
over  the  July,  1914,  level.  In  September  an  additional  duty 
of  4d.  per  pound  was  imposed  and  prices  advanced  by  an 
average  of  3|d.  per  pound,  so  that  by  the  end  of  the  year  tea 
was  48  per  cent  higher  than  before  the  outbreak  of  the  war. 
During  191 6  movements  in  the  retail  price  of  tea  were  insig- 
nificant, and  1917  found  tea  only  about  3  per  cent  higher  than 
it  was  at  the  beginning  of  1916;  this  represents  an  increase  of 
about  9d.  per  pound,  7d.  of  which  is  accounted  for  by  an  in- 
creased duty.  In  1 91 7  there  was  a  continuous  rise  in  the  price 
of  tea,  which  advanced  from  2s.  4d.  per  pound  at  the  begin- 
ning of  the  year  to  3s.  2d.  at  the  beginning  of  December.  It 
declined  then  about  i^d.  per  pound,  and  at  January,  1918, 
the  price  was  98  per  cent  above  the  July,  1914,  level. 

Sugar  rose  on  August  8,  1914,  to  80  and  90  per  cent  above 
the  level  in  July.  It  fell  somewhat  and  then  rose  again,  at 
the  beginning  of  January,  1915,  the  price  of  granulated  sugar 
being  two-thirds  higher  than  at  the  beginning  of  the  war. 
The  price  remained  unchanged,  usually  at  3|d.  per  pound, 
from  January  to  September,  1915,  but  in  that  month  it  rose 
to  4d.   per  pound  in  most  parts  of  the  United   Kingdom. 


GREAT    BRITAIN  29 

Sugar  was  2d.  per  pound  just  before  the  war.  In  the  first  three 
months  of  1916,  the  price  rose  to  4fd.  per  pound.  In  April  there 
was  an  increase  of  ^d.  per  pound  because  of  increased  duty. 
Since  that  time  small  monthly  increases  occurred  which  have 
in  the  aggregate  raised  the  average  price  to  5^d.  per  pound. 
Of  this,  i^d.  is  attributable  to  duty.  There  was  no  change 
in  price  up  to  the  beginning  of  May,  191 7.  An  increase  then 
took  place,  and  from  July  to  the  end  of  the  year  the  price  was 
6d.  per  pound. 

The  slight  advance  in  the  price  of  milk  during  the  latter 
part  of  1914  (it  was  6  per  cent  on  January  i,  1915)  was 
purely  seasonal.  There  were  few  changes  in  the  price  of  milk 
until  September,  1915.  At  the  beginning  of  this  month  the 
average  price  was  12  per  cent  above  that  of  July,  1914,  and 
at  the  beginning  of  January,  1916,  the  corresponding  figure 
was  29  per  cent,  which  represents  an  increase  from  3|d.  to  4^d. 
per  quart.  The  average  retail  price  of  milk  was  about  4|d. 
per  quart  during  the  first  four  months  of  1916  and  4fd.  from 
May  I  to  August.  In  September  an  upward  trend  in  prices 
set  in,  which  continued  throughout  the  rest  of  the  year  and 
brought  the  price  to  nearly  5^d.  per  quart  at  the  beginning 
of  1 91 7.  This  represented  a  57  per  cent  increase  over  July, 
1914,  prices.  Milk  averaged  5^d.  per  quart  from  January  to 
September,  when  an  advance  began  which  raised  the  average 
price  to  7d.  at  the  beginning  of  1918,  about  double  the  level 
of  July,  1914. 

Butter,  after  a  marked  rise  in  August,  rapidly  fell  to  little 
above  normal ;  an  increase  in  price  during  September,  October 
and  November  may  be  ascribed  to  season.  An  additional 
rise  of  5  per  cent  occurred  between  December  i  and  January 
I,  on  which  date  butter  was  about  14  per  cent  higher  than  in 
July,  1914.  During  the  first  part  of  1915,  barring  slight 
fluctuations,  butter  remained  steady  at  about  15  per  cent 
increase  over  July,  1914.  From  July,  1915,  to  October  it 
rose  very  substantially,  reaching  an  increase  of  34  per  cent  in 
the  latter  month.  In  1916,  the  prices  remained  fairly  steady 
at  this  level  from  January  until  August.     During  the  latter 


30  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

month  and  in  each  of  the  remaining  months  of  the  year  a 
substantial  increase  was  recorded,  so  that  at  the  end  of  the 
year  butter  was  about  30  per  cent  dearer  than  at  the  beginning 
and  70  per  cent  dearer  than  in  July,  1914.  The  steep  rise  was 
not  arrested  until  March,  1917,  when  it  was  nearly  80  per  cent 
(over  iid.  per  pound)  dearer  than  just  before  the  war.  The 
advance  continued,  and  by, the  beginning  of  October  prices 
were  approximately  double  those  of  July,  1914.  By  this 
time  the  prices  of  most  butters  were  under  control,  an  excep- 
tion being  afforded  by  Danish  products,  which,  free  from 
control  at  the  import  stage,  retailed  at  4s.  and  more  per  pound. 
By  the  end  of  the  year  Danish  butter  was  brought  into  line 
with  other  butter;  the  price  of  butter  has  been  reduced  to 
about  the  level  of  October  i,  191 7,  viz.,  2s.  5d.  per  pound,  or 
about  double  the  July,  1914,  price. 

Cheese  was  not  affected  greatly  by  the  panic  in  the  early 
part  of  August,  1914.  During  the  period  September  to 
December  the  price  rose  5  per  cent  and  at  the  end  of  the  year 
it  reached  a  level  of  10  per  cent  above  that  in  July,  19 14.  A 
steady  advance  continued  throughout  the  first  half  of  191 5, 
the  total  increase  during  the  six  months  being  20  per  cent, 
or  2d.  per  pound.  The  price  fell  slightly  and  then  recovered 
again.  On  January  i,  1916,  the  increase  over  July,  1914, 
was  32  per  cent.  A  steady  upward  movement  in  the  price 
(3  to  4  per  cent  a  month)  characterized  the  cheese  situation 
in  191 6;  the  only  exceptions  to  this  were  the  months  of  June 
and  July,  in  which  the  price  declined  7  per  cent,  and  Novem- 
ber, when  a  7  per  cent  rise  took  place.  At  the  end  of  1916 
the  price  of  cheese  was  about  75  per  cent  above  the  level  just 
before  the  war.  Cheese  rose  by  4d.  per  pound  between  Jan- 
uary and  June,  191 7,  at  which  time  its  average  price  was 
IS.  7^d.  per  pound,  as  compared  with  8fd.  in  July,  1914.  At 
the  end  of  June,  1917,  "government  cheese"  of  colonial  or 
American  origin  was  introduced  for  retail  sale  at  is.  4d.  per 
pound  and  British  cheese  came  under  control  soon  afterwards. 
The  result  was  that  cheese  sold  at  the  beginning  of  1918  at 
about  IS.  4|d.  a  pound. 


GREAT    BRITAIN  3I 

During  the  latter  part  of  1914  and  through  1915  the  price 
of  margarine  showed  very  little  change  over  prewar  figures, 
apart  from  a  rise  of  from  15  to  20  per  cent  and  a  subsequent 
fall  in  the  early  weeks  of  the  war.  During  1916  there  was  an 
increase  of  a  little  over  id.  per  pound,  and  between  January 
and  July,  1917,  an  advance  of  3^d.  per  pound  occurred.  On 
December  i,  191 7,  the  price  averaged  about  §d.  per  pound 
lower  than  in  July,  1917,  and  4^d.  higher  than  just  before  the 
war;this  amounts  to  iid.or  is.perpoundfor  the  ordinary  kind. 

After  a  sharp  rise  at  the  beginning  of  the  war,  the  prices 
of  eggs  fell  again  to  a  level  only  about  12  per  cent  above  that 
of  July.  Large  advances  took  place  from  September  to 
November,  and  on  January  i,  1915,  the  price  of  fresh  eggs 
showed  an  increase  of  63  per  cent  above  the  July  level,  a 
part  of  this  rise  being  due  to  the  time  of  the  year.  Variations 
in  1 91 5  were  largely  seasonal,  but  prices  were  higher  than  dur- 
ing the  corresponding  periods  in  1914.  The  same  price  situa- 
tion continued  through  1916  and  1917,  eggs  in  July,  1916, 
being  about  50  per  cent  higher  than  in  the  same  month  in  19 14. 
At  the  beginning  of  December,  191 7,  they  were  twice  as  dear  as 
they  were  three  years  earlier,  the  price  having  risen  to  4d.  for  an 
Q^gg,  as  compared  with  3^d.  on  January  i,  191 7,  and  2d.  in  April, 

Potatoes  fluctuated  considerably  in  price  from  place  to  place. 
In  large  towns  prices  on  Augusts,  1914,  averaged  about  15  per 
cent  above  those  of  July,  while  in  the  small  towns  and  villages 
the  increase  was  only  4  per  cent.  Subsequently,  prices  fell 
continuously  until  the  end  of  October,  when  they  reached  a 
level  below  the  July  prices  by  16  per  cent  in  the  small  towns 
and  villages.  On  January  i,  1915,  they  were  below  the  July 
level  by  II  and  22  per  cent,  respectively.  In  1915  variations 
in  prices  were  largely  seasonal  and  did  not  show  much  in- 
crease over  the  prices  for  corresponding  periods  in  1 914.  At 
the  end  of  the  year  the  decrease  for  large  towns  M^as  wiped 
out  and  the  prices  were  about  equal  to  those  of  July,  1914. 
The  price  of  potatoes  remained  comparatively  normal  until 
April,  1 91 6.  In  that  month  there  was  a  rise  of  over  40  per 
cent  in  the  average  price  of  old  potatoes,  and  further  advances 


32  PRICES   AND    PRICE   CONTROL   DURING   THE    WAR 

of  8  per  cent  in  May  and  31  per  cent  in  June  followed.  On 
July  I  the  average  price  of  old  potatoes  was  lod.  per  7  pounds, 
as  compared  with  4fd.  per  7  pounds  until  April.  Prices  of 
new  potatoes  on  August  i  were  gd.  per  7  pounds,  dropping 
to  7|d.  per  pound  at  the  beginning  of  September.  Prices 
remained  fairly  stationary  at  this  high  level  for  some  weeks 
and  then  a  rise  of  34  per  cent  took  place  in  October;  additional 
increases  of  4  per  cent  for  the  following  two  months  resulted 
in  the  prices  at  the  end  of  the  year  averaging  lofd.  per  7 
pounds,  or  about  130  per  cent  higher  than  twelve  months 
earlier.  The  average  price  of  potatoes  ranged  from  lo^d.  to 
iifd.  per  7  pounds  in  the  first  half  of  191 7.  The  rise  has  been 
due  to  scarcity.  When  the  Food  Controller  established  a 
maximum  price  of  ifd.  per  pound  it  was  rapidly  adopted  in 
most  places.  The  plentiful  crop  of  191 7  resulted  in  the  price 
of  potatoes  falling  to  an  average  of  6fd.  per  7  pounds.^ 

Taking  the  price  of  each  article  as  reported  in  July,  1914, 
as  a  base,  the  following  table  shows  the  per  cent  of  increase 
in  prices  of  certain  articles  since  July,  1914.^ 

Large  Towns  (Populations  Small  Towns  and  Villages  United 

Article                         over  50,000)  Kingdom 

Jan.  I,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i,  Jan.  i, 

1915  1916  1917  1918  191S  1916  1917  1918  1917  1918 
Beef,  British: 

Ribs 8  37  66  78  6  34  62  83  64  81 

Flank,  thin ...  .  15  51  93  107  8  39  74  95  84  loi 
Beef,  chilled  or 
frozen: 

Ribs 18  51  90  120  IS  43  81  113  85  116 

Flank,  thin.  ..  .  32  70  107  152  21  57  96  122  lOl  137 
Mutton,  frozen: 

Legs 19  45  90  142  14  38  83  126  86  134 

Breast 28  70  127  109  21  56  117  134  122  162 

Bacon,  streaky.  9  34  60  147  5  28  53  130  56  I39 

Fish 51  119  iss  223  31  75  108  169  I3i  196 

Flour,  household  18  46  84  50  23  52  93  54  88  52 

Bread 18  45  79  57  14  39  68  52  73  54 

Tea 14  49  51  98  13  48  50  99  SI  98 

Sugar,  granulated  69  97  I73  194  65  89  167  185  170  189 

Milk 6  30  59  103  7  28  54  96  57  99 

Butter: 

Fresh 12  32  72  102  16  36  74  105  73  103 

Salt 10  30  70  106  14  33  71  105  71  105 

Cheese 10  32  74  91  10  32  75  91  75  91 

Margarin 5  8  25  71  4  6  25  61  25  66 

Eggs 62  108  179  2S2  6s  102  171  233  175  242 

Potatoes "11  ..  138  SI  »22  »io  105  23  122  37 

All  above  articles 
(weighted  per- 
centage increase)  19  48  91  III  17  42  83  102  87  106 

*  Decrease. 

^  The  data  for  the  discussion  of  retail  prices  were  taken  from  the  Labour  Gazette 
for  1915,  1916,  1917  and  January,  1918. 

2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  19 16,  p.  83; 
Labour  Gazette,  January,  1918,  p.  5. 


GREAT    BRITAIN  33 

With  reference  to  items  of  expenditure  other  than  food 
there  have  been  substantial  increases,  except  with  regard  to 
rents,  but  the  average  advance  has  not  been  so  great  as  in 
food.  The  increase  from  July,  1914,  to  January  i,  1918,  in 
the  cost  of  all  the  items  ordinarily  entering  into  working  class 
family  expenditure,  including  food,  rent,  clothing,  fuel  and 
light,  etc.,  may  be  estimated  at  between  80  and  85  per  cent, 
taking  the  same  quantities  of  the  various  items  at  each  date 
and  eliminating  advances  arising  from  increased  taxation, 
and  between  85  and  90  per  cent,  if  increases  due  to  taxation 
are  included. 

The  average  percentage  of  increase  between  July  14,  19 14, 
and  December,  191 7,  in  retail  prices  of  a  number  of  groceries 
of  less  importance  in  the  working  class  dietaries  may  be  seen 
from  the  following  statement : 

Per  Cent  Per  Cent 

Lentils,  split  (red) 230         Milk,  condensed 120 

Peas,  split  (yellow) 210         Beans,  butter no 

Sago 190         Jam 1 10 

Tapioca 160         Rice,  Rangoon 100 

Syrup 160         Cocoa  (loose) 95 

Beans,  haricot 140         CoflFee 30 

Oatmeal,  Scotch 140 

The  average  rise  of  these  items  is  clearly  greater  than  with 
the  principal  foodstuffs.^  Excluding  coffee,  for  which  the  ad- 
vance has  been  exceptionally  small,  the  average  increase  is 
between  140  and  150  per  cent,  as  compared  with  105  per  cent, 
shown  as  the  average  for  the  principal  articles  of  food. 

Clothing 

With  regard  to  clothing,  the  statistical  data  available  are  not 
so  extensive  as  those  drawn  upon  for  food  prices,  but  the  fol- 
lowing table,  made  up  from  selected  cases  and  supplied  to  the 
committee  by  the  Department  of  Labour  Statistics  of  the 
Board  of  Trade  may  be  taken  as  broadly  representative  of 
the  upward  movement  in  the  prices  of  standard  articles  of 
clothing  and  boots: 

1  Labour  Gazette,  December,  1917,  p.  438. 


34  PRICES   AND    PRICE    CONTROL    DURING   THE   WAR 

AVERAGE  PERCENTAGE  INCREASE  IN  THE  PRICES  OF  THE 
UNDERMENTIONED  CLOTHING  MATERIALS,  ARTICLES  OF 
CLOTHING  AND  BOOTS,  BETWEEN  JULY,  1914,  AND  SEPTEMBER, 
1916^ 

Article  or  Material  September  i,  1916 

Woolen  material  for  garments 75% 

Woolen  underclothing  and  hosiery 90% 

Men's  suits  and  overcoats 40% 

Cotton  material  for  garments 50% 

Cotton  underclothing  and  hosiery 50% 

Boots  and  shoes: 

Men's  heavy 75% 

Men's  light 60% 

Women's 60% 

Children's 70% 

Coal 
Retail  prices  of  coal  vary  greatly  as  between  coal  producing 
areas  and  other  parts  of  the  country.  Thus,  while  in  Lan- 
cashire and  Yorkshire  increases  of  3s.  to  5s.  per  ton  are  noted 
as  between  July,  1914,  and  September,  1916,  in  the  south  of 
England  and  in  Ireland  prices  have  risen  as  much  as  14s.  and 
15s.  per  ton.  The  following  table  gives  the  course  of  retail 
prices  in  1915-16,  the  average  price  in  July,  1914,  being  25s. 
4d.  for  London  and  22s.  5d.  for  the  30  provincial  towns  in- 
cluded in  the  table  :^ 

Average  Price  per  Ton  at 
the  Beginning  of  each 
Date  Month 

Provincial 
London  Towns 

1915, 

January 29s.  4d.  23s.    5d. 

March 34s.  4d.  26s.    9d. 

May 3 IS.  4d.  27s.    3d. 

July 31S.  6d.  27s.  lod. 

September 31s.  6d.  27s.  iid. 

November 32s.  4d.  28s.  sd. 

1916 

January 32s.  4d.  28s.  iid. 

March 33s.  4d.  29s.    2d. 

May 33s.  4d.  29s.    4d. 

July 33s.  4d.  29s.    8d. 

September 33s.  4d.  29s.    9d. 

The  pit  head  price  of  coal  was  regulated  in  191 5  by  the 
Price  of  Coal  (Limitation)  Act,  which  imposed  penalties  for 

'  Interim  report  of  the  committee  appointed  by  the  Board  of  Trade  to  investi- 
gate the  cause  for  the  increase  of  prices  of  commodities,  Cd.  8358,  1916. 
^  Interim  report  of  the  committee  on  prices,  Cd.  7866,  pp.  6-7. 


average  Percentage 

Increase  be- 

tween  July, 

1917. 

to  Beginning 

of  each  Month 

Provincial 

London 

Towns 

Per  Cent 

Per  Cent 

16 

5 

36 

19 

24 

22 

24 

24 

24 

25 

28 

27 

28 

29 

32 

30 

32 

31 

32 
32 

32 
33 

GREAT    BRITAIN  35 

asking  or  taking  a  price  exceeding  by  more  tlian  a  standard 
amount  (4s.  per  ton)  the  price  for  coal  of  the  same  description, 
sold  under  similar  conditions,  in  the  period  July,  1913,  to 
June,  1914. 

Lowest  summer  prices  of  coal  were  maintained  in  London 
from  June  16  to  September  25,  1914,  inclusive;  the  retail  price 
of  "best  Derbyshire,"  a  typical  coal  of  good  quality,  during 
the  period  was  26s.  per  ton.  The  rise  between  September  25 
and  February  17  was  9s.,  as  compared  with  a  rise  of  only  2s. 
in  the  winters  of  both  1912-13  and  1913-14.  The  price  of 
trolley  coal  (coal  sold  in  small  quantities  generally  to  working 
class  consumers)  rose  in  even  greater  degree.^ 

^  Interim  report  of  the  committee  on  prices,  Cd.  7866,  p.  7. 


CHAPTER   III 

Causes  of  the  Rise  in  Prices 

The  reasons  given  for  the  rise  in  prices  are  usually  prompted 
by  certain  aspects  of  the  situation  which  are  forced  upon  the 
attention  of  each  individual  observer  by  his  own  personal 
experience  or  by  the  character  of  his  special  investigations. 
Those  occupied  with  monetary  transactions  view  the  subject 
from  a  different  angle  than  those  who  are  engaged  in  the  pro- 
duction and  distribution  of  commodities  or  those  who  are 
students  of  agricultural  economics. 

Prices  have  been  rising  all  over  the  world  for  over  two 
decades,  their  upward  trend  having  started  in  1895.  This 
phenomenon  attracted  the  attention  of  statesmen,  economists 
and  social  workers  and  much  has  been  written  on  the  subject 
in  an  attempt  to  explain  the  causes  of  the  rise  and  to  suggest 
remedies.  The  problem  has  become  particularly  acute  since 
the  outbreak  of  the  war.  While  prices  advanced  about  50 
per  cent  from  1895  to  1913,  their  advance  between  1912  and 
191 7  was  over  90  per  cent.^ 

Inflation 

Inflation  has  been  one  of  the  causes  most  frequently  as- 
signed for  the  war  rise  in  the  general  level  of  prices.  Speak- 
ing before  the  House  of  Lords  on  November  20,  191 7,  Lord 
Rhondda  made  the  statement  that  "the  principal  factor 
in  increasing  prices  was  the  expansion  of  currency  arising 
from  inflation  of  credit  and  the  issue  of  a  large  amount  of 
paper  money."^  A  couple  of  months  earlier  Mr.  Runciman 
expressed  the  view  that  the  main  cause  of  the  rise  in  prices 
was  the  impossibility  to  finance  the  war  without  a  degree 
of  inflation  altogether  unprecedented.^  Mr.  McKenna  ex- 
pressed about  the  same  time  a  similar  view.^ 

'  Business  Digest,  1917,  p.  1491. 

*  The  Economist,  November  24,  191 7,  p.  837. 
^Liberal  Magazine,  August,  1917,  p.  363. 

*  The  Economist,  July  28,  1917,  p.  iii. 

36 


GREAT   BRITAIN  37 

These  expressions  of  opinion  are  in  keeping  with  what  has 
been  pointed  out  again  and  again  by  the  Economist,  the 
Statist,  the  Nation  and  other  British  periodicals.  The  chief 
cause  of  increased  prices,  writes  the  Nation,  has  been  the  im- 
mense borrowing  of  the  government,  borrowing  which  has 
not  been  confined  to  the  savings  of  the  people,  but  which 
stimulated  the  manufacture  of  paper  credit  by  bankers  and 
financiers.^ 

The  Economist  believes  that  as  long  as  the  government  will 
continue  its  policy  of  creating  fresh  currency  in  all  its  forms  so 
long  will  prices  continue  to  rise  as  the  result  of  inflation. ^ 
'  The  greater  the  output  and  the  wider  the  distribution  of 
notes  and  certificates,  the  larger  the  demand  for  commodities 
of  which  the  supply  has  been  steadily  declining;  the  result  of 
it  has  been  and  necessarily  so  a  continuous  rise  in  prices.^ 

The  currency  has  been  inflated  in  two  ways:  (i)  by  increase 
of  volume  and  (2)  by  rapidity  of  circulation,  the  latter  having 
been  brought  about  by  a  great  redistribution  of  wealth.  An 
abnormal  amount  of  money  has  been  thrown  constantly  into 
circulation  among  large  masses  of  the  population  who  spend  ; 
it  from  week  to  week.^ 

But  while  statesmen  have  been  pointing  to  inflation  as  a 
cause  for  the  rise  in  prices  and  while  they  have  been  either 
justifying  or  attacking  the  fiscal  policy  of  the  government, 
no  careful  investigation  has  been  made  as  to  the  extent  of  the 
disproportion  between  the  issue  of  currency  and  checks  and 
the  wants  of  the  British  trade.  Various  governmental  com- 
mittees, chambers  of  commerce  and  other  public  bodies 
confined  their  inquiries  to  the  study  of  price  fluctuations  of 
some  specific  commodity;  they  were  not  concerned  with  index 
numbers,  and,  when  giving  reasons  for  the  increase  in  the 
price  of  milk,  of  meat  or  of  coal,  they  do  not  mention  inflation 
at  all. 

1  The  Nation,  October  14,  19 16. 

2  The  Economist,  June  9,  1917,  p.  1061;  September  i,  1917,  p.  316. 

'A.  Hurd:  "Wages,  Prices  and  Supplies — A  Vicious  Circle,"  The  Fortnightly 
Review,  January,  19 18,  p.  38. 

*  A.  Shadwell:  "Food  Prices  and  Food  Supply,"  The  Nineteenth  Century  and 
After,  April,  1917,  p.  741. 


38        PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

Statistical  studies  that  have  been  made  so  far  by  British 
economists  seem  to  deal  with  but  one  side  of  the  question,  the 
circulation  media.  Sir  Inglis  Palgrave  asserts  that  Great 
Britain  is  clearly  suffering  from  an  excessive  issue  of  paper 
and  that  she  shows  all  the  symptoms  of  the  disease — inflated 
prices,  speculation  and  a  popular  and  fiscal  demand  for  still 
larger  issues  to  sustain  the  inflated  price.  However,  the  only 
definite  data  that  we  find  in  his  paper  are  statistics  showing 
the  value  of  notes  and  certificates  outstanding  from  the  time 
they  were  first  issued  when  the  war  broke  out  to  November, 
I  1917.  On  August  26,  1914,  their  value  was  £21,535,065  as 
I  compared  with  £189,944,339  on  November  7,  1917,  a  rise  of 
[880  per  cent.  Mr.  Palgrave  discusses  the  risks  of  issuing  in- 
convertible money  in  response  to  the  demand  of  the  Treasury 
and  not  to  the  wants  of  trade,  but  what  he  says  are  mere 
conjec^tures.  However  valuable  they  may  be,  they  do  not 
give  any  tangible  data  as  to  the  condition  of  the  British  trade 
and  thus  they  do  not  permit  one  to  form  any  definite  opinion 
as  to  the  exact  role  which  inflation  has  played  in  raising 
prices.^ 

Professor  Pigou's  statement  that  perhaps  four-fifths  of  the 
rise  has  been  inevitable  and  that  not  more  than  one-fifth  of 
the  responsibility  for  it  may  be  thrown  upon  Great  Britain's 
monetary  and  banking  arrangement,  may  be  accepted  for 
what  it  is  worth.  It  is  merely  a  "perhaps,"  prompted  par- 
tially by  the  thought  that  in  view  of  the  large  volume  of 
(British)  commodity  imports  as  compared  with  commodity 
exports,  the  shortage  of  tonnage  and  consequent  rise  of  freights 
must  have  affected  prices  in  Great  Britain  more  than  it  has 
affected  world  gold  prices. ^ 

One  of  the  most  painstaking  inquiries  into  the  subject  of 
inflation  has  been  made  by  Professor  Nicholson.  However, 
all  of  his  facts  and  figures  also  bear  upon  the  monetary  side  of 
the  situation  and  do  not  throw  any  light  except  by  inference 
on   the   changes    in    the  volume   of   the    country's  business 

^  1  Sir  R.  H.  Inglis  Palgrave:  "The  Influence  of  the  Currency  Rates  on  Prices," 
Bankers'  Magazine,  December,  1917,  pp.  632-636. 
2  A.  C.  Pigou:  "Inflation,"  The  Economic  Journal,  December,  1917,  p.  494. 


GREAT    BRITAIN  39 

transactions.  Professor  Nicholson^  takes  up  the  increase  of 
different  forms  of  currency  since  the  beginning  of  the  war  for 
the  purpose  of  showing  to  what  extent  the  increase  has 
deviated  from  the  increase  in  the  prewar  time,  or  has  been 
"abnormal."  He  begins  with  postal  orders,  a  form  of  legal 
tender  which  was  unrepresented  before  the  war.  Their  use 
as  currency  has  been  confined  to  the  earliest  stages  of  the 
conflict.  Section  6  of  the  Currency  and  Bank  Notes  Act 
(1914,  4  and  5  Geo.  V,  ch.  14)  which  made  postal  orders  legal 
tender  was  revoked  by  proclamation  dated  February  3,  191 5. 
During  the  fortnight  ending  August  20,  postal  orders  over 
13,000,000  in  number,  of  the  value  of  £4,600,000  were  issued, 
compared  with  5,000,000  in  number  and  £2,000,000  in  value 
during  the  corresponding  fortnight  in  1913.  They  were  issued 
for  the  purpose  of  meeting  immediate  exigencies  and  by  the 
end  of  October,  1914,  the  value  in  the  hands  of  the  public  did 
not  exceed  the  normal  amount.  According  to  Mr.  Nicholson, 
postal  orders  may  be  considered  as  the  beginning  of  Treasury 
notes  or  the  germ  of  the  inflation. ^ 

The  net  issues  of  silver  coinage  for  the  five  months  of  the 
war  in  1914  were  £5,327,899.  This  compares  with  £318,000 
of  the  first  seven  months  before  the  war,  or  is  about  seventeen 
times  as  great.  The  net  increase  in  silver  in  191 5  and  in  19 16 
was  in  each  year  about  eight  times  the  average  of  the  four 
prewar  years. ^ 

Professor  Nicholson  found  a  close  conformity  between  net 
issues  of  silver  and  money  wages.  He  does  not  mean  to  say 
that  the  increase  in  silver  of  itself  raised  wages,  but  that  such 
an  increase  rendered  possible  the  continued  rise.  The  con- 
nection of  wages  and  prices  in  order  of  time  varies  in  different 
cases.  At  the  beginning  of  the  war  the  special  war  demand, 
backed  by  government  funds,  raised  some  wages.  Substitu- 
tion and  sympathy  raised  others.  With  the  expenditure  of  the 
new  earnings,  prices  rose  in  response  to  the  fresh  demands. 

'  I.  Shield  Nicholson:  "Statistical  Aspects  of  Inflation,"  Journal  of  the  Royal  ■ 
Statistical  Society,  July,  1917,  pp.  467-494. 
2  Ibid.,  pp.  468-469. 
^  Ibid.,  p.  469. 


40  PRICES   AND    PRICE   CONTROL   DURING   THE    WAR 

Then  came  the  demand  for  war  bonuses  to  meet  the  increased 
cost  of  living.  The  special  war  bonus  was  followed  by  the 
general  sympathetic  war  bonus. 

Such  a  rise  in  wages  and  in  earnings  was  only  possible  with 
an  increase  of  currency — silver  and  notes.  If  the  restraints 
of  peace  time  on  the  issues  of  currency  had  been  in  force,  a 
monetary  crisis  would  have  put  an  end  to  the  rise.^ 

The  issues  of  bronze  from  August  to  December,  19 14 
(£132,000)  did  not  exceed  the  average  of  191 2-1 3.  The  in- 
crease in  1915  was  below  that  of  1912-13.  In  1916,  however, 
bronze  rapidly  increased  to  £450,000,  and  for  the  period  of 
the  war  to  the  end  of  March,   191 7,  the  net  increase  was 

£951.689.^ 

With  regard  to  the  effect  of  gold  on  prices  many  general 
conclusions  have  been  drawn,  most  of  them  tending  to  show 
that  the  purchasing  power  of  gold  has  been  steadily  dimin- 
ishing. The  world  production  of  gold  has  been  going  on  un- 
checked by  the  war.    Since  1906  it  was  as  follows: 

1906 £80,110,204  1912 £94,466,653' 

1907 82,258,891  1913 94,494,000 

1908 88,666,905  1914 90,208,000 

1909 91,985,496  1915 96,525,000 

1910 90,842,729  1916 94,563,000 

1911 91,875,460  1917 88,000,000* 

Gold,  writes  the  Economist,  is  about  the  only  article  which 
the  belligerents  do  not  seek  to  destroy,  so  that  the  war  is 
reducing  the  quantity  of  commodities  without  reducing  the 
quantity  of  gold  in  the  world. ^  The  unprecedented  amount 
of  goods  destroyed  daily  in  the  war  zones  has  changed  the 
ratio  of  exchange  value  between  the  available  supply  of 
gold  and  commodities.  "Goods  are  not  higher,  but  gold  is 
cheaper."^ 

Professor  Nicholson  gives  the  estimated  amount  of  gold  in 
1 1  the  United  Kingdom  on  June  30,  1914,  as  £161,100,000.     The 

'  Xicholson:  op.  cit.,  p.  486. 
^  Ibid.,  pp.  468-469. 

'  The  Economist,  February'  17,  191 7,  p.  292. 

*  The  Statist,  April  13,  1918,  p.  631.     The  figures  for  the  years  1913-1917  are 
taken  from  The  Statist:  they  differ  somewhat  from  those  in  The  Economist. 
'  The  Economist,  February  13,  1915,  p.  263. 
'  The  Literary  Digest,  November  24,  1917. 


GREAT   BRITAIN  4I 

gold  coin  in  the  country  increased  from  £100,000,000  in  1903 
to  £113,000,000  in  1910,  or  less  than  £2,000,000  per  annum. 
From  December  31,  1910,  to  June  30,  1914,  the  estimated 
increase  was  £48,100,000,  or  just  under  £14,000,000  per  an- 
num. From  the  outbreak  of  the  war  to  December  31,  1914, 
"the  Bank  of  England  received  the  enormous  addition  of 
£64,000,000  in  bullion  and  coin,  considerable  amounts  being 
purchased  and  left  in  South  Africa,  Canada  and  other  parts 
of  the  Empire."^ 

In  spite  of  this  strong  gold  position,  large  quantities  of 
Treasury  notes  have  been  issued  since  the  very  first  months 
of  the  war.  At  the  end  of  December,  1914,  the  amount 
outstanding  was  £38,500,000;  in  December,  1915,  it  was 
£103,100,000;  in  December,  1916,  £150,000,000.  If  the 
issue  of  Treasury  notes  was  concurrent  with  the  calling  in  of 
gold,  it  would  not  have  caused  any  inflation  of  the  currency, 
but,  as  a  matter  of  fact,  Treasury  notes  were  issued  before 
there  was  any  limitation  of  the  gold  in  circulation.  Gold  was 
not  (to  any  appreciable  extent)  either  hoarded  or  made  into 
ornaments.  The  effect  of  the  notes  was  then  exactly  the  same 
as  if  new  amounts  of  gold  were  added.  The  net  amount  of 
gold  issued  the  year  before  the  war  was  £15,000,000,  which 
was  a  good  deal  above  the  average.  But  in  the  first  five 
months  of  the  war  (to  December,  1914)  £38,500,000  of  notes 
were  issued;  deducting  gold  for  redemption  (£18,500,000),  it 
represents  a  net  addition  of  £20,000,000  in  five  months.  The 
rate  of  increase  of  the  notes,  £55,000,000  per  annum  during 
1 91 5  and  1916,  was  nearly  six  times  as  large  as  the  annual 
issue  of  gold  from  1908  to  1914.- 

Lastly,  one  must  consider  the  use  of  checks  and  the  amount 
of  bank  deposits  against  which  the  checks  are  drawn.  The 
growth  of  deposits  may  be  obtained  from  the  Economist 
banking  numbers.  In  1913  the  aggregate  was  £1,104,000,000; 
it  increased  to  £1,290,000,000  in  1914,  i.e.,  by  £186,000,000. 
Before  the  war  the  increase  in  deposits  for  the  last  ten  years 

^  Nicholson:  op.  cit.,  p.  471. 
'^  Ibid.,  pp.  471-472. 


42  PRICES   AND    PRICE   CONTROL   DURING   THE    WAR 

had  been  on  the  average  £30,000,000  a  year.  In  191 5  the 
increase  was  £123,000,000;  in  1916,  £210,000,000.  In 
recent  years  checks  became  very  popular  in  England  and 
they  have  supplanted  currency  to  a  very  considerable  extent. 
In  1913,  the  aggregate  London  Bankers'  Clearing  House 
returns  were  £16,400,000,000,  these  returns  by  no  means 
including  all  the  checks  in  the  kingdom.  There  was  a  con- 
siderable decrease  in  town  clearings  from  the  beginning  of 
the  war  until  191 7.  From  August,  1914,  to  December,  1914, 
as  compared  with  the  same  period  in  191 3,  the  decrease  was 
33.8  per  cent.  The  decrease  in  191 5  as  compared  with  191 3 
was  22  per  cent  and  in  191 6  it  was  about  7  per  cent.  This 
decrease  was  due  largely  to  restrictions  on  financial  dealings. 
In  1917  the  total  town  clearing  rose  to  £16,877,000,000,  thus 
exceeding  by  £3,474,000,000  the  clearing  in  1916  and  by 
£477,000,000  that  in  1913.^ 

A  study  of  country  clearings  which  represent  commercial 
checks  as  distinct  from  checks  purely  financial  in  character 
shows  an  increase  about  fivefold  over  the  prewar  rate  of  in- 
crease. The  total  country  clearings  fori9i5  were  £1,567,000,- 
000,  compared  with  £1,389,000,000  for  1913,  an  increase  of 
£178,000,000,  or  13  per  cent.  The  increase  in  1916  was 
£483,000,000  over  1913,  or  35  per  cent.^  In  1917  the  country 
clearing  was  £2,244,000,000,  an  increase  of  £372,000,000  over 
1916,  or  19.85  per  cent.^ 

In  connection  with  these  data.  Professor  Nicholson  makes 
an  attempt  to  determine  the  volume  of  British  trade.  He 
assumes  that  with  the  same  level  of  prices  the  increase  in  the 
country  clearings  may  be  said  to  measure  roughly  the  increase 
in  the  volume  of  trade.  The  Statist  index  numbers  show  a 
rise  in  prices  from  85  in  1913  to  136  in  191 6,  an  increase  of  60 
per  cent.  If  the  volume  of  trade  had  remained  the  same,  the 
country  clearing  returns  would  have  shown  an  increase  from 
£1,389,000,000  in  1913  to  £2,222,000,000  in  1916  (60  per 
cent),  instead  of  an  increase  to  £1,872,000,000,  or  35  percent 

^  The  Economist,  May  18,  1918,  p.  781. 

2  Nicholson:  op.  cit.,  p.  471. 

^  The  Economist,  May  18,  1918,  p.  781. 


GREAT   BRITAIN  43 

only.  According  to  Mr.  Kitchin,  the  volume  of  British  trade, 
taking  Statist  figures  as  a  basis  and  with  1913  =  100,  was  as 
follows:     for  1914 — 86|,  1915 — 86^,  1916 — 81. 

Before  discussing  the  connection  between  the  abnormal 
increase  of  currency  and  the  abnormal  rise  in  prices,  Professor 
Nicholson  is  careful  to  repudiate  the  acceptance  of  the  quan- 
tity theory  in  the  simplest  form,  even  after  allowing  for  the 
rapidity  of  circulation.  He  suggests  that  an  alternative  expla- 
nation of  the  relation  between  the  two  increases  is  that  the  rise 
in  prices  w^as  due  in  the  first  place  to  obstruction  of  supply  and 
intensification  of  demand,  and  that  with  rising  prices  more 
currency  has  been  called  for  to  do  the  monetary  work.  Prices 
may  rise  first  of  all  through  speculation,  and  it  is  only  when 
the  inflated  prices  have  to  be  translated  into  money  wages 
and  other  incomes  that  the  real  demand  for  more  currency 
arises.^  The  proper  test  to  apply  in  any  particular  case  in 
considering  the  relations  between  the  two  increases  is  the 
order  of  time.  As  Treasury  notes  have  taken  the  place  of 
gold  in  Great  Britain,  they  may  be  said  to  form  the  most 
important  part  of  the  legal  tender  currency. 

In  trying  to  ascertain  the  relation  between  the  issue  of  \\ 
Treasury  notes  and  the  rise  in  prices,  Mr.  Nicholson  took  , 
quarterly  periods  and  compared  the  two  sets  of  increases.  He 
found  that  if  one  compares  the  same  periods  quarter  by 
quarter  there  does  not  seem  to  be  any  connection.  If,  how- 
ever, the  comparison  is  made  of  the  note  increases  in  one 
quarter  with  the  index  number  increases  in  the  following 
quarter  there  is  a  remarkable  correspondence.  For  exam- 
ple, the  large  note  increase  in  the  December  quarter,  1914, 
is  followed  by  a  large  index  number  increase  in  the  next 
quarter — March,  1915.  The  slight  increases  of  notes  in  the 
next  two  quarters  are  followed  by  slight  increases  only  in 
index  numbers.  The  very  large  increase  in  notes  in  the 
September  and  December  quarters  of  191 5  is  followed  by  a 
large  increase  in  the  next  two  quarters  in  index  numbers. 
For  the  remainder  of  the  war  period  up  to  July,  191 7,  the 

*  The  Economist,  May  18,  1918,  p.  480. 


44  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

correspondence  in  quarters  was  not  so  striking,  but  the  gen- 
eral trends  of  expansion  have  been  the  same.^ 
I  'According  to  Mr.  Nicholson,  in  order  of  time,  the  abnormal 

©increase  of  currency  preceded  the  abnormal  rise  in  prices  and 
in  wages,  and  if  the  inflation  of  the  currency  continues  the 

,rise  of  prices  will  also  continue.  In  contrast  to  Professor 
Nicholson's  views  are  the  conclusions  to  which  a  Select  Com- 
mittee of  the  British  House  of  Commons  arrived  in  its  search 
of  what  caused  the  rise  in  prices.  While  the  committee  of 
investigation  admits  that  the  extension  of  bank  credits  due 
to  the  war  had  had  its  effect,  it  calls  attention  to  the  fact  that 
the  stock  of  gold  in  Great  Britain  had  decreased,  instead  of 
increased.  As  to  the  relation  between  the  advance  in  prices 
and  the  volume  of  outstanding  currency,  the  committee  states 

,  that  "  the  issue  of  paper  currency  .  .  .  plays  a  very  sub- 
ordinate part.  The  large  increase  in  the  amount  of  currency 
(by  about  50  per  cent)  is,  in  the  opinion  of  the  committee,  the 
result  of  the  growth  of  transactions  and  of  prices,  and  not  the 
cause  of  them."     The  chief  causes  of  the  rise  in  prices  are 

I  thus  stated  by  the  committee:  "the  falling  short  in  the  sup- 

:  ply  of  goods  as  compared  with  demand;  the  expenditure  of 
y\  payments,   made  by  the  government  for  commodities  and 

'■      /i\         services,  in  buying  goods  for  private  consumption. "^ 
^    j/  ^  Of  interest  in  connection  with  this  discussion  may  be  some 

^  data  showing  the  extent  of  the  world  "  inflation."  The  amount 

of  money,  gold,  silver  and  uncovered  paper  in  circulation  in 
forty  principal  countries  of  the  world  increased  from  $9,830,- 
000,000  in  1895  to  $24,660,000,000  in  191 7,  an  increase  of 
150  per  cent,  while  population  increased  13  per  cent.  The 
amount  of  "uncovered"  money  increased  since  19 13  in  coun- 
tries at  w^ar  400  per  cent.  Equally  large  has  been  the  increase 
in  "promises  to  pay."  The  total  national  debts  of  the  world 
in  1895  were  $28,750,000,000,  in  1913,  $43,840,000,000;  by 
July,  1917,  they  rose  to  $160, 000, 000, 000. ^ 

^  Tlie  Economist,  May  18,  1918,  pp.  481-482. 
^Bankers'  Magazine,  July,  1918,  p.  7. 
^  Business  Digest,  1917,  p.  1491. 


great  britain  45 

Increased  Consumption 

Increased  consumption  has  been  held  responsible  for  quite  a 
substantial  rise  in  prices  before  the  outbreak  of  war.  A 
greater  equalization  of  wealth  raised  "tremendously"  the 
purchasing  power  of  the  people.'  The  war  brought  with  it  an 
insistent  and  inelastic  demand  on  the  part  of  the  government 
for  all  kinds  of  commodities  needed  to  feed,  clothe,  equip, 
house  and  transport  the  army.  Money  paid  by  the  govern- 
ment filters  through  to  the  people  engaged  in  production  and 
thus  creates  an  additional  effective  demand,  higher  wages  are 
being  paid,  war  bonuses  are  being  given,  family  incomes  be- 
come larger  because  of  remunerative  employment  of  women 
and  children. 

"A  soldier,  whether  at  the  front  or  not  eats  about  half  as 
much  again  as  in  private  life,"  said  Mr.  Pretyman  in  a  de- 
bate on  prices  in  the  House  of  Commons.  "Millions  of  men 
are  now  serving  .  .  .  and  the  consumption  of  food  among 
them  is  anything  from  half  as  much  again  to  twice  as  much  as 
in  normal  civilian  life."^  The  report  of  the  committee  ap- 
pointed by  the  United  Kingdom  to  study  food  prices  gives 
as  one  of  the  causes  of  the  rise  an  "abnormal  consumption 
of  food,  fodder  and  clothes  by  armies  in  the  field. "^ 

This  abnormal  consumption  has  been  partially  due  to  a 
certain  amount  of  loss  through  waste,  an  unavoidable  accom- 
paniment of  provisioning  soldiers  on  the  firing  line,  and  par- 
tially to  healthy  appetites  of  those  who  spend  their  time  in 
strenuous  exercising  in  the  open  air.  The  wear  and  tear  on 
clothing,  shoes,  etc.,  is  obviously  also  very  great  and  these 
articles  need  continuous  replenishing. 

At  the  same  time  large  sections  of  the  working  population 
became  buyers  of  more  and  better  food  than  formerly.  Ac- 
cording to  Mr.  Runciman  "the  general  testimony  in  favor 
of  this  judgment  is  overwhelming."^     The  workers  have  been 

1  W.  A.  Kiddy:  "  Inflation,"  Journal  of  the  Institute  of  Actuaries,  October,  1917, 
p.  287. 

*  The  Economist,  August  26,  1916,  p.  355. 

*  Chicago  Commerce,  August  30,  1917,  p.  14. 

*  Mr.  Runciman's  speech  in  the  House  of  Commons,  quoted  from  The  Nation, 
October  21,  1916. 


46  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

spending  money  "on  the  liberal  scale  to  which  they  have 
become  accustomed  in  the  early  and  seemingly  prosperous 
months  of  the  war,  automatically  raising  the  prices  against 
themselves."^ 

The  statement  with  regard  to  greater  consumption  on  the 
part  of  the  civilian  population  hardly  holds  true  in  the  case  of 
meat.  Before  the  war  40  per  cent  of  the  nation's  consumption 
of  beef  and  mutton  was  supplied  by  imports;  this  dropped  to 
only  20  per  cent  in  1915.  The  main  reasons  for  the  decline 
were  the  abnormal  demand  for  frozen  meat  for  the  armies  of 
the  Allies  and  the  increased  dependence  of  France  on  foreign 
imports. 2  These  causes  continued  to  operate  through  the 
subsequent  years  of  the  war. 

As  a  result,  on  the  one  hand,  of  the  reduction  of  the  im- 
ported supplies  and  attendant  high  prices  and,  on  the  other 
hand,  of  the  appeals  made  by  the  government  to  the  citizens 
in  general  to  curtail  their  use  of  meat,  the  civilian  consump- 
tion of  beef  and  mutton,  according  to  the  Board  of  Trade 
estimates,  has  latterly  (in  1916)  been  reduced  by  about  one- 
sixth.^ 

There  is  a  discrepancy  between  this  finding  of  the  Board 
of  Trade  and  the  contention  that  one  of  the  main  causes  of 
the  rise  in  the  price  of  meat  has  been  the  increased  demand  of 
the  masses  of  people,  owing  to  the  better  wages  they  were 
earning.  According  to  the  Spectator,  the  Board  of  Trade  has 
had  reports  from  all  the  principal  industrial  centers,  showing 
how  the  working  classes  are  buying  meat  much  more  freely 
than  before,  and  do  not  hesitate  to  pay  the  best  prices  for 
the  best  joints.^  In  order  to  reconcile  the  two  statements, 
one  must  assume  that  the  curtailment  of  consumption  has 
been  exercised  by  other  classes  of  population  than  the  indus- 
trial workmen. 

The  price  of  milk  has  been  forced  upwards,  according  to  the 

*  Hurd:  op.  cit.,  p.  43. 

2  Report  (interim)  of  the  Board  of  Trade  committee  on  prices,  Cd.  8358,  p.  8. 

3  Ibid.,  p.  8. 

*  W.  F.  Ford:  "Currency  Inflation  and  the  Cost  of  Living,"  Fortnightly  Review, 
January,  1918,  p.  83. 


GREAT   BRITAIN  47 

Board  of  Trade  Committee  on  Prices,  by  "the  increased  de- 
mand of  the  producers  of  margarine,  tinned  milk  and  milk 
chocolate,  together  with  that  of  the  hospitals."^ 

The  view  that  national  consuming  capacity  has  on  the 
whole  increased  is  combated  by  Mr.  Ford,  who  contends  that 
against  any  possible  increase  caused  by  the  average  soldier 
consuming  more  now  than  he  did  when  he  was  a  civilian  must 
be  set  a  decrease  of  national  consuming  capacity  as  a  result 
of  the  impoverishment  of  numerous  people  who  have  had  to 
suffer  privations  because  their  incomes  have  been  stationary 
or  diminished  while  prices  have  gone  up.^  Whether  one 
agrees  or  disagrees  with  this  view,  one  must  admit  that  the 
only  right  way  of  determining  to  what  extent,  if  any,  national 
consumption  has  increased  is  to  make  comparisons  between 
the  prewar  and  the  war  period  and  to  make  these  comparisons 
on  the  basis  of  quantities,  not  prices.  The  necessary  figures 
to  enable  one  to  do  this  are  not  available. 

Reckless  Buying 

The  forces  must  be  liberally  supplied  with  food,  clothing, 
munitions.  The  government  enters  the  market  as  a  heavy 
buyer  with  "unlimited"  means  and  in  a  hurry,  cost  being  no 
object.^  Military  purchases  have  not  been  of  the  most 
economical  type.  "There  has  been  too  much  of  the  amateur 
in  the  market,  who  generally  pays  very  dear  for  his  opera- 
tions. "^ 

Higher  Cost  of  Production 

The  average  cost  of  producing  and  of  marketing  commodi- 
ties has  risen  since  the  beginning  of  the  war  because  in  order 
to  satisfy  a  rapidly  increasing  demand  it  became  necessary 
to  resort  to  less  efficient  factors  of  production.  Many  skilled 
workmen  were  withdrawn  from  peace  time  industries  for  war 
activities;  and  a  great  deal  of  unskilled  labgr  was  injected  into 

^  The  Spectator,  vol.  117,  1916,  p.  456. 

^  Report  (interim)  of  the  Board  of  Trade  Committee  on  Prices.     Cd.8358.     1916, 
p.  12. 

'Shadwell:  op.  cit.,  pp.  739-740. 
*  Kiddy:  op.  cit.,  p.  278. 


48        PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

mines,  mills  and  factories  for  the  purpose  of  maintaining  and 
raising  the  output.  Under  present  temporary  and  abnormal 
conditions  every  source  of  supply  must  be  brought  into  use 
and  put  into  operation  "upon  a  basis  of  cost  which  would  have 
been  prohibitory  at  any  other  time  within  the  last  thirty 
years.  "^ 

In  considering  the  causes  of  the  advance  in  retail  prices  of 
meat,  which  on  September  i,  1916,  averaged  about  5^d.  per 
pound  above  those  of  July,  1914,  the  Board  of  Trade  Commit- 
tee on  Prices  reported  that  "to  a  certain  extent  this  increase 
can  be  at  once  accounted  for  in  terms  of  cost  of  production, 
which  has  steadily  risen. "^ 

"The  government  at  an  early  stage  of  the  war  put  restric- 
tions on  the  export  of  feeding  stuffs,  including  oil  cakes,  maize, 
barley  and  oats,  and  also  on  fertilizers.  .  .  .  Neverthe- 
less the  prices  of  feeding  stuffs  and  fertilizers  have  risen 
greatly." 

Average  Price  per  Ton   Average  Price  per  Ton 

before  the  War  in  July,  1916 

£      s.  d.  £  s.     d. 
Feeding  stuffs: 

Linseed  Cake 8       5  10  12  15     9 

Cotton  Seed  Cake 5     16  3  9  I5     9 

Soya  Bean  Cake 613  8  12  26 

Maize  Meal 7     10  o  ll  8     o 

Fertilizers: 

Nitrate  of  Soda  (best) 10     14  9  18  50 

Basic  Slag  (prime  quality  f°  p.  c. 

phosphorus) I      16  7  3  06 

Sulphate  of  Ammonia 13     11  8  17  12     I 

Decline  in  the  Supply  of  Commodities 

The  decline  in  the  supply  of  many  commodities  has  been 
due  to  the  diversion  of  men  to  the  armies  and  to  the  pro- 
duction of  goods  for  the  operation  of  war.^  While  some  main- 
tain that  because  of  the  worldwide  diversion  of  labor  there 
has  been  a  worldwide  curtailment  in  the  production  of  foods, 

^  Marsh:  "Economic  Difficulties  in  the  Way  of  Successful  Price  Fixing,"  The 
Economic  World,  July  21,  1917,  p.  79. 

"^  Report  (interim)  of  the  committee  appointed  by  the  Board  of  Trade  to  inves- 
tigate the  principal  causes  which  led  to  the  increase  of  prices  of  commodities 
since  the  beginning  of  the  war,  Cd.  8358,  1916,  p.  7. 

*  Labour  Gazette  (Canadian),  September,  1917,  p.  714. 


GREAT   BRITAIN  49 

raw  materials  and  finished  commodities/  others  blame  the 
reduction  in  British  sea  carrying  capacity  for  the  shortage. 
"The  nation  has  apparently  not  yet  realized,"  writes  Mr. 
Hurd,  "that  there  is  plenty  of  food  to  be  had  over  the  seas 
and  that  there  are  ample  supplies  of  raw  material  for  industry 
available  if  we  possessed  the  necessary  tonnage. 
The  unrivalled  resources  of  this  country  for  making  good 
the  losses  to  shipping  are  not  being  utilized  to  the  fullest 
extent 


2 


The  diversion  of  men  from  productive  work  to  other  pur- 
suits has  led  to  greater  use  of  machinery,  to  working  overtime 
and  to  enlisting  more  female  labor  into  mills  and  factories, 
as  well  as  into  agricultural  activities,  but  all  this  only  miti- 
gated the  effect  of  diversion  without  entirely  offsetting  it. 

The  decline  in  supplies  is  also  the  result  of  the  destruction 
of  property  on  land  by  the  passage  of  armies  and,  what  is  of 
greater  immediate  significance  to  Great  Britain,  through  the 
sinking  of  ships,  many  of  which  were  carrying  towards  the 
Isles  thousands  of  tons  of  food  and  raw  material. 

The  decline  in  the  available  tonnage  resulted  in  the  narrow- 
ing of  the  markets;  many  sources  of  supply  have  been  grad- 
ually eliminated  because  of  distance,  as  ships  can  not  be 
spared  for  long  routes  on  account  of  the  length  of  time 
consumed  in  going  and  in  coming. 

The  South  Wales  panel  of  the  Commission  of  Inquiry  into 
Industrial  Unrest  in  Great  Britain^  was  "inclined  provisionally 
to  adopt  the  view  that  the  major  part  of  the  increased  cost  of 
food  is  due  in  part  directly  and  in  part  indirectly  to  the 
destruction  of  tonnage  by  enemy  submarines."^ 

Milk  prices  rose  because  the  rapidly  rising  meat  prices  of 
191 5,  accompanied  as  they  were  by  a  shortage  of  labor,  led 

»G.  M.  Reynolds:  "Steady  Business  to  Meet  War's  Shock,"  The  Nation's 
Business,  October,  1917,  p.  53.  See  also  the  Report  of  the  Committee  of  the 
General  Federation  of  Trade  Unions  of  the  United  Kingdom:  "Some  50,000,000 
of  the  world  workers  .  .  .  (are  now)  engaged  in  war  and  in  the  production  of 
munitions  of  war."    Quoted  from  the  Chicago  Commerce,  August  30,  1917,  p.  I4- 

^  Hurd:  op.  cit.,  pp.  50-52. 

^ Infra,  p.  100. 

*  Industrial  Unrest  in  Great  Britain,  Bulletin  of  the  U.  S.  Bureau  of  Labor 
Statistics,  No.  237,  p.  180. 


50  PRICES   AND   PRICE   CONTROL  DURING  THE  WAR 

to  some  slaughtering  of  milk  cows.^  It  was  necessary  by 
orders  dated  June  22  and  August  18,  191 5  (the  latter  of  which 
was  amended  on  March  31,  191 6)  to  put  a  restraint  upon  the 
slaughtering  of  cows  obviously  in  calf.  At  the  same  time  a 
limit  was  put  upon  the  slaughter  of  calves  under  six  months 
old.  Not  a  few  farmers  were  anxious  to  abandon  the  dairying 
business  because  of  the  long  hours  of  labor  involved  in  it  and 
because  of  strict  legal  requirements  as  to  sanitation  and 
quality  of  milk. 

The  bearing  of  shortage  upon  prices  may  be  seen  in  compar- 
ing grain  conditions  of  191 5  and  early  191 6  with  conditions 
towards  the  end  of  191 6  and  through  191 7.  It  was  the  record 
crops  of  191 5  which  made  the  problem  of  supply  easy  to  solve. 
In  1 91 6  there  were  short  crops  all  over  the  world.  Shortages 
developed  not  only  in  grain  but  also  in  potatoes,  the  result 
being  a  rapid  rise  in  prices. ^ 

In  1 916-17  there  were  harvested  in  Argentina,  Australia 
and  New  Zealand  about  61,581,000  quintals,  as  compared 
with  97,864,000  in  191 5-16,  and  67,080,000,  the  average  for 
the  five  years,  1 909-1 91 3,  the  decline  being  due  to  an  excep- 
tionally small  crop  in  Argentina.^ 

One  of  the  contributory  causes  for  the  rise  in  meat  prices 
was  the  severe  drought  of  191 5  in  Australia,  which  destroyed 
a  large  quantity  of  stock  and  greatly  curtailed  Australian 
supplies.*  The  reduction  in  the  number  of  live  stock  in  differ- 
ent parts  of  the  world  manifested  itself  again  in  191 6  because 
of  the  demands  of  the  war,  shortage  of  feed  and  the  drought 
of  the  summer.^ 

The  sharply  and  rapidly  rising  prices  made  the  statistics  of 
the  values  of  British  imports  and  exports  of  no  assistance  for 
the  purpose  of  obtaining  data  as  to  the  amount  of  commodi- 
ties imported  and  exported  since  the  beginning  of  the  war. 

1  Report  (interim)  of  the  Board  of  Trade  Committee  on  Prices,  Cd.  8358,  1916, 
p.  II. 

"^Labour  Gazette  (Canadian),  May,  1917,  p.  392. 

'  Bulletin  of  Agricultural  Statistics,  published  by  the  International  Institute  of 
Agriculture  in  Rome;  quoted  from  The  Economist,  March  31,  1917,  p.  584- 

*  Report  (interim)  of  the  Board  of  Trade  committee  on  prices,  Cd.  8358,  19 1 6, 
p.  9. 

^Labour  Gazette  (Canadian),  May,  1917,  p.  392. 


GREAT   BRITAIN  5 1 

Some  light  may  be  thrown  on  this  question  by  comparing 
the  yearly  returns  of  foreign  trade  shipping  of  the  country.' 

1916  1915  1914 

Entered  (with  Cargoes) 

British 20,217,334  22,861,738  28,928,883 

Foreign 9,842,094  10,862,166  14,131,890 

Total 30,059,428  33-723,904  ■     43,060,783 

Cleared  (with  Cargoes) 

British 17,751,953  20,380,530  32,515,814 

Foreign 17,844,807  19,148,832  23,452,755 

Total 35,596,754  39,529,362  55,968,569 

The  above  figures  show  that  the  entry  of  ships  with  cargoes 
decreased  from  1914  to  1916  by  13,001,355  tons,  and  the  clear- 
ance by  20,371,815  tons. 

During  the  same  period  the  change  in  the  value  of  imports 
and  exports  was  as  follows  :^ 

IMPORTS   AND   EXPORTS 

Merchandise 
Imports  Exports  Exports 

c.  i.  f.                (British)           (Foreign   and  Exports 

Values         f.  o.  b.  Values           Colonial)  (Total) 

f.  o.  b.  Values 

£                          £                          £  £ 

1916 949,152,679    506,546,212    97,608,502  604,154,714 

1915 851,893,350    384,868,448    99,062,181  483,930,629 

1914 696,635,113    430,721,357    95,474,166  526,195,523 

The  value  of  imports  increased  from  1914  to  1916  by  £252,- 
517,506,  and  the  value  of  exports  by  £77,959,191.  The  ac- 
counts of  goods  imported  do  not  include  certain  goods  which 
at  the  time  of  importation  were  the  property  of  the  British 
Government  or  the  governments  of  the  Allies.  The  accounts 
of  goods  exported  include  goods  bought  in  the  United  King- 
dom by  or  on  behalf  of  the  governments  of  the  Allies,  but  do 
not  include  goods  taken  from  British  government  stores  and 
depots  or  goods  bought  by  the  British  Government  and 
shipped  on  government  vessels.  Unofficial  estimates  placed 
the  value  of  the  excluded  imports  at  from  £120,000,000  to 
£150,000,000  in  1915.^ 

^  Trade  and  Navigation  Accounts,  House  of  Commons  Sessional  Papers,  Decem- 
ber, 1916,  vol.  31,  p.  I. 
2  Ibid.,  p.  I. 
2  "Trade  in  War  Time,"  The  Political  Quarterly,  March,  1916,  p.  loi. 


52  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

The  imports,  exports  and  reexports  in  1917  were  £1,065,- 
256,407,  £525,308,991  and  £69,552  respectively.  1  These  fig- 
ures profess  to  include  for  the  last  six  months  of  the  year  (July 
to  December)  certain  government  imports  not  included  in  the 
figures  of  the  previous  years,  namely,  articles  imported  and 
exported  in  public  as  well  as  private  ownership  "so  far  as 
particulars  are  available  at  the  time  of  compilation." 

As  the  Economist  remarks,  no  one  can  tell  the  degree  of 
omission  concealed  behind  this  cryptic  reservation.  Exports 
for  the  use  of  British  forces  in  any  theatre  of  the  war  are  still 
excluded.  Presumably  also  supplies  shipped  straight  to  the 
British  armies  in  France  and  elsewhere  do  not  appear  in  the 
published  import  figures.^  Imports  of  food  have  always  been 
included  in  the  returns.  The  figures  of  the  Economist  for 
1 91 6  differ  somewhat  from  those  given  in  the  preceding  table. 
Taking  these  figures  (£948,506,492),  the  rise  in  the  value  of 
imports  in  1917  over  1916  was  £116,749,915.  In  order  to 
arrive  at  the  quantity  of  goods  imported  and  exported,  the 
Economist  until  last  year  had  the  practice  of  recalculating 
the  individual  items  of  trade  returns  at  prices  of  the  preced- 
ing year,  and  also  at  prices  of  1913  (the  prewar  year). 

The  table  opposite  gives  the  recalculated  figures  of  the 
returns  for  191 6  at  191 3  and  191 5  prices,  as  well  as  the  value 
of  trade  during  these  three  years  according  to  the  existent 
prices. 

The  calculation  at  191 3  prices  shows  that  while  the  re- 
corded value  of  imports  rose  between  191 3  and  191 6  by 
£180,500,000,  the  quantity  of  goods  imported  in  reality  de- 
clined by  £112,800,000  (14^  per  cent),  higher  prices  making 
it  appear  as  if  the  volume  of  imports  rose  by  £293,300,000  {2^^ 
per  cent.)'  The  total  turnover  of  trade,  which  was  higher  by 
£149,800,000,  according  to  the  published  figures,  really  de- 
clined by  £284,200,000  (20  per  cent),  but  higher  prices  caused 
an  increase  of  434,000,000  (31  per  cent)  in  the  recorded  value. 
An  analysis  of  the  individual  groups  of  imports  for  1916  as 

^  The  Economist,  January  19,  191 8,  p.  76. 

2  Ibid. 

^  Ibid.,  January  27,  1917,  pp.  130-131. 


GREAT   BRITAIN 

Value  of 

1916 

Value  Trade  at         Value 

Recorded  19 13         Recorded 

in  1916  Prices         in  1913 

Imports:                                       £  £                  £ 

Food  and  drink 419-5  276.9           290.2 

Raw  materials 337-0  249.7           281.8 

Manufactures 189.3  127. i           193-6 

Total    imports    (incl. 

mis.) 949.2  655.9           768.7 

British  exports: 

Food  and  drink 29.5  20.6             32.6 

Raw  materials 64.3  38.3             69.9 

Manufactures 393-7  306.7          411 -4 

Total  British  exports 

(incl.  mis.) 506.5  379.9           525.2 

Reexports : 

Food  and  drink 21. i  17.3             15-9 

Raw  materials 49 -i  44-2             64.0 

Manufactures 27.3  22.0             29.5 

Total  reexports   (incl. 

mis.) 97.6  83.5           109.6 

Total  turnover i, 553-3  i-ii9-3      "1,403  5 

*  The  Economist,  January  27,  1917,  p.  130. 
^  Ibid.,  January  20,  1917,  p.  81. 


Value  of 

1916 
Trade  at 

1915 
Prices 

£ 
353-5 
235-4 
150-8 


743-1 

24-5 

46-3 

329-9 


419-7 

18.8 
38-1 
24.8 


Si. 7 


53 


Value 

Recorded 

in  1915 

£ 
380.9 
286.6 
181. 4 


851-9 

25-1 

52-4 

292  .9 


384-9 

22.4 
54-6 
22  .0 


99-1 


1,244.5      "1,335-9 


compared  with  191 3  shows  that  had  prices  remained  at  the 
191 3  level  the  value  of  foodstuffs  imported  would  have  de- 
clined by  £13,300,000  (4I  per  cent),  but  the  higher  prices 
were  responsible  for  a  recorded  increase  of  £129,300,000. 
The  value  of  imported  raw  materials  would  have  declined  by 
£32,100,000  (about  11^  per  cent),  but  a  rise  in  prices  made  the 
value  appear  £55,200,000  higher.  Of  manufactures,  the  value 
would  have  been  reduced  by  £66,500,000  (34  per  cent),  the 
increase  in  prices  resulting  in  a  recorded  decline  of  only 
£4,300,000. 

The  calculation  at  191 5  prices  shows  that  there  was  ac- 
tually a  decline  of  £91,400,000  in  the  value  of  trade  in  1916, 
as  compared  with  1915,  while  the  published  figures  recorded 
an  increase  in  the  total  movement  of  goods.  The  rise  in  prices 
is  responsible  for  an  increase  of  £308,800,000.  The  volume 
of  trade  declined  by  over  6  per  cent,  but  the  average  prices 
increased  by  24.8  per  cent.    An  analysis  of  the  individual  groups 


54  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

of  imports  for  1916  as  compared  with  191 5  shows  that  the 
quantity  of  foodstuffs  imported  decHned  to  the  extent  of  £27,- 
400,000  (7  per  cent),  but  the  average  prices  were  17^  per  cent 
higher,  resulting  in  a  recorded  increase  of  £38,600,000.  In 
the  case  of  raw  materials,  the  decline  was  equal  to  £51,200,000 
(18  per  cent).  The  prices,  however,  went  up  by  35.5  per  cent, 
accounting  for  an  increase  of  £101,600,000  in  value.  The 
imports  of  manufactures  declined  by  £30,700,000  (17  per 
cent),  but  a  rise  of  21  per  cent  in  prices  made  the  value  appear 
£38,500,000  higher.! 

One  must  keep  in  mind  also  that  imports  are  given  at  c.  i.  f. 
(cost,  insurance  and  freight)  prices  and  that  an  increase  in 
freight  and  insurance  rates  besides  the  rise  in  average  prices 
accounts  for,  the  great  increase  in  the  value  of  imports. 

Particulars  of  quantities  for  food,  drink,  tobacco  are  no 
longer  obtained  in  the  returns  so  as  to  keep  the  enemy  in 
ignorance  of  the  actual  tonnage  of  goods  received.  Statistics 
are  available  for  other  imports  and  examples  of  higher  value 
and  smaller  quantities  are  furnished  by  raw  cotton,  of  which 
16,213,713  centals  of  100  pounds  were  purchased  in  1917 
for  £110,590,634,  as  compared  with  a  purchase  of  21,710,022 
centals  for  £84,729,677  in  1916,  and  of  26,476,161  centals  for 
£64,671,623  in  1915. 

Mr.  Paish  stated  in  May,  191 6,  that  as  far  as  available 
data  permitted  an  opinion  to  be  formed,  the  small  decline 
in  production  in  Great  Britain  in  191 5  was  offset  by  in- 
creased imports  from  abroad,  due  mainly  to  government 
purchases,  and  by  reduced  exports,  so  that  the  country's 
consumption  in  191 5  was  much  greater  than  it  was  in  191 3, 
the  last  complete  year  of  peace. ^  This  conclusion  differs 
from  the  conclusions  of  the  Political  Quarterly,  which  wrote 
in  its  March,  1916,  issue  that  "the  first  and  the  most 
striking  feature  of  trade  returns  is  the  enormous  increase 
in  the  price  paid  for  food  supplies."  According  to  this 
magazine,  "the  United  Kingdom  paid  in  191 5  an  increased 

'  The  Economist,  January  20,  1917,  p.  81. 

*  George  Paish:  "War,  Finance,"  Journal  of  the  Royal  Statistical  Society,  May, 
1916,  p.  276. 


GREAT    BRITAIN  55 

price  of  over  ninety  millions  for  if  anything  a  less  amount 
of  food  than  was  imported  in  19 13."'  In  the  latter  part  of 
1916  the  Nation  quoted  Mr.  George  Lambert,  who  pointed 
out  that  some  actual  shrinkage  in  home  production  was 
taking  place.  According  to  the  Nation,  against  this  reduc- 
tion in  the  home  supply  must  be  set  the  unknown  quantity 
of  imports,  which,  being  bought  abroad  and  brought  over  by 
the  government  for  the  use  of  troops,  do  not  figure  in  the 
statistics  of  imported  food.  "If  half  our  troops,"  writes 
the  Nation,  "are  supplied  in  this  way,  this  means  that  some 
two  and  a  half  million  men  must  be  deducted  from  the 
population  which  our  ordinary  imported  and  home  grown 
supplies  have  to  provide  for.  Thus  it  appears  quite  intelli- 
gible that  there  may  be  no  real  shortage  of  supplies  of  bread 
and  meat  for  our  population,  in  spite  of  the  strain  upon 
transport  and  the  apparent  reduction  in  the  number  of  retail 
butchers'  shops. "^  The  Nation  s  reference  to  government 
importations  is  palpably  wrong,  as  the  accounts  of  importa- 
tions, while  excluding  until  July  i,  191 7,  certain  goods  which 
at  the  time  of  importation  were  the  property  of  the  British 
Government  or  the  governments  of  the  Allies,  never  excluded 
food  imports.  Mr.  Lambert's  statement  that  there  has  been 
a  shrinkage  in  home  production  since  the  beginning  of  the 
war  was,  at  the  time  when  he  wrote,  supported  to  a  certain 
extent  by  facts. 

There  was  no  real  shortage  of  food  during  the  first  two 
years  of  war,  if  one  accepts  the  report  of  a  committee  of  the 
Royal  Society  which,  at  the  request  of  the  President  of  the 
Board  of  Trade,  made  a  searching  investigation  of  the  food 
supply  in  the  United  Kingdom.  However  scientific  may  be 
conclusions  based  on  grammes  of  protein  and  of  carbohy- 
drates or  on  calories  of  energy  value,  they  do  not  give  an  exact 
view  of  the  food  situation,  as  they  do  not  show  the  availability 
of  the  most  desirable  or  most  sought  for  articles  of  diet. 
People  do  not  go  into  grocery  stores  for  grammes  of  carbo- 
hydrates, protein  or  fat;  they  ask  for  eggs,  cheese  or  butter 

^Political  Quarterly,  March,  1916,  p.  103. 
^  The  Nation,  October  21,  1916,  p.  102. 


56  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

and  if  the  supply  of  these  articles  is  not  sufficient  to  meet  the 
demand,  their  price  will  go  up,  even  though  there  may  be 
plenty  of  sago  or  fish  on  the  market.  This  has  been  particu- 
larly true  of  Great  Britain.  The  Englishman  has  been  de- 
scribed as  very  exacting  in  his  demands,  not  content  with 
a  sufficient  supply:  "it  must  be  of  the  kind  that  suits  him. 
.  .  .  He  is  a  creature  of  habit  and  grumbles  extremely 
if  he  is  forced  against  his  will  to  change  it,  even  to  the  extent 
of  drinking  another  kind  of  tea."^  Having  been  able  to  draw 
upon  the  whole  world  for  necessaries  and  luxuries  of  life,  he 
became  probably  the  most  pampered  person  in  the  world  in 
his  choice  of  food. 

A  change  of  diet  is  not  accomplished  overnight;  it  takes 
time  to  learn  the  usage  and  value  of  substitutes,  and  while 
under  a  supreme  test  people  will  eat  horses,  dogs  and  cats, 
as  the  Parisians  did  during  the  siege  of  Paris,  in  1870-71, 
they  will  not  give  up  their  customary  food  even  for  more 
nutritious,  and  what  some  may  consider  more  palatable,  stuff 
until  they  actually  feel  the  imperative  need  for  such  action. 

The  Royal  Society  Committee's  report  shows  what  was 
the  country's  position  with  regard  to  food  in  July,  191 6,  as 
compared  with  the  prewar  situation.  The  report  states  that 
the  problem  is  partly  statistical,  partly  physiological,  involv- 
ing (i)  a  knowledge  of  quantities  of  foods  available  and  (2)  the 
determination  of  the  adequacy  of  the  supply  for  the  suste- 
nance of  the  nation,  the  latter  calculated  in  the  amounts  of 
protein,  fat  and  carbohydrates  contained  in  the  given  foods. 

Taking  the  average  for  five  years  preceding  the  war  (1909- 
191 3),  the  quantities  (in  metric  tons)  of  food  materials  im- 
ported (net)  and  home  produced  were  as  follows: 

Cereals 4,865,000 

Meat 2,685,000 

Poultry,  eggs,  game,  rabbits 331,000 

Fish ,. 848,400 

Dairy  products,  lard  and  margarin 5,231,800 

Fruit 1,271 ,000 

Vegetables 5,482,000 

Sugar,  cocoa  and  chocolate *  1,657,000 

*  The  Food  Supply  of  the  United  Kingdom.    A  report  drawn  by  a  committee  of 
the  Royal  Society  at  the  request  of  the  President  of  the  Board  of  Trade,  Cd.  8421. 

'  R.  H.  Rew:  Food  Supplies  in  War  Time,  Oxford  Pamphlets,  1914,  p.  5. 


GREAT    BRITAIN  57 

Generally  speaking,  a  woman  or  a  child  requires  less  food 
than  a  man,  i.e.,  has  a  man  value  less  than  a  unit.  According 
to  the  report,  the  conversion  of  a  population  of  men,  women 
and  children  into  units  or  "men"  reduces  the  total  number 
by  23  per  cent.  In  assuming  that  lOO  "men,  women  and 
children"  as  consumers  equal  77  units  or  "men,"  the  quanti- 
ties of  food  available  in  Great  Britain  during  1909-1913  were 
per  "  man  "  (estimating  the  population  of  the  country  as  having 
been  45,200,000) : 


Protein 

Fat 

Carbohydrates 

Energy  Value 

Grammes 

Grammes 

Grammes 

Millions  of  Calories 

113 

130 

571 

4009 

The  above  figures  compare  very  favorably  with  what  is  ac- 
tually needed  for  proper  nutrition.  The  normal  requirements 
per  head  per  day  involve  the  use  of : 


Protein 

Fat 

Carbohydrates 

Energy  Value 

Grammes 

Grammes 

Grammes 

Millions  of  Calories 

87 

100 

440 

3091 

In  July,  1916,  the  total  population  of  Great  Britain  was 
estimated  at  46,500,000,  including  fighting  forces  at  home 
and  abroad,  prisoners,  etc.  The  available  food  in  time  of 
war  must  be  distributed  into  two  shares:  (i)  for  military  and 
naval  establishments  (4,000,000  men)  and  (2)  for  civilian  popu- 
lation (31,800,000  men).  Such  a  distribution  of  food  on  the 
basis  of  supply  equal  to  that  of  1 909-1913,  as  illustrated 
in  the  following  table,  shows  that  on  the  prewar  basis  of  supply 
the  food  available  for  the  civilian  population  would  have  been 
more  than  sufficient  as  regards  the  supply  both  of  protein  and 
of  energy. 

Protein  Fat  Carbohy-         Energy  Value 

Grammes      Grammes  drates  Millions  of 

Grammes  Calories 

Military 140  180  500  4300 

Civil 106  120  563  3859 

According  to  the  findings  of  the  committee,  the  supply  of  food 
available  up  to  July  29,  191 6,  provided  a  margin  of  about  five 
per  cent  above  the  minimum  necessary  for  proper  nutrition. 
The  committee  adds  to  its  findings  the  very  pertinent  remark 


58  PRICES   AND    PRICE    CONTROL    DURING   THE   WAR 

that  "while  the  supply  of  food  has  been  adequate  for  the 

support  of  the  population,  the  rise  in  prices  has  accentuated 

the  inequalities  of  distribution,  which  reduce  the  daily  ration 

of  many  below  the  level  of  efficiency." 

During  the  period  considered  by  the  committee  oversea 

supplies  of  the  principal  foodstuffs  had  been  on  the  whole 

well  maintained:^ 

1914-15  1915-16 

Cwts.  Cwts. 

Wheat  and  flower in ,500,000  in ,800,000 

Rice 10,100,000  8,300,000 

Sugar 35,800,000  32,000,000 

Beef 8,000,000  7,300,000 

Mutton 4,600,000  3,500,000 

Bacon 6,400,000  6,900,000 

Hams 1,300,000  1,400,000 

Butter 3,700,000  2,800,000 

Margarin i  ,700,000  2,600,000 

Cheese 2,800,000  2,500,000 

In  the  five  years  before  the  war,  the  United  Kingdom  im- 
ported 64  per  cent  of  foodstuffs  consumed  there,  producing 
only  36  per  cent  at  home.^ 

One  factor  is  often  overlooked,  and  this  is  the  effect  of  the 
war  on  the  number  of  consumers.  The  population  of  Great 
Britain,  instead  of  growing  as  it  did  before  the  war,  became 
stationary,  i.e.,  the  war  losses  have  been  balanced  by  the  gain 
in  births.^ 

High  Freight  and  Insurance  Rates 

It  is  natural  that  in  a  country  which  like  Great  Britain 
depends  for  a  large  part  of  necessary  foodstuffs  and  raw 
materials  upon  foreign  markets,  availability  of  tonnage,  freight 
rates  and  costs  of  marine  insurance  should  be  considered  as 
important  factors  in  determining  the  price  of  commodities. 
When,  after  the  declaration  of  war,  prices  began  to  rise, 
many  people  attributed  the  increase  to  disorganization  of 
ocean  transportation  and  to  exceedingly  high  freight  charges. 

'  H.  S.:  "Early  Phases  of  Food  Control,"  The  Edinburgh  Review,  January, 
1918,  p.  114. 

2  John  Hilton:  "The  Foundation  of  Food  Policy,"  The  Edinburgh  Review,  July, 
1918,  p.  29. 

'  R.  Henry  Rew:  "The  Prospects  of  the  World's  Food  Supplies  after  the  War," 
Journal  of  the  Royal  Statistical  Society,  January,  1918,  p.  55. 


GREAT    BRITAIN  59 

Some  idea  as  to  how  war  conditions  affected  freight  rates 
may  be  formed  from  the  investigation  of  the  Departmental 
Committee  on  Prices.  It  found  a  wide  difference  in  tariffs  on 
wheat  and  fiour  in  the  period  January  to  March,  1914,  as 
compared  with  the  period  July  to  September,  1916.  The 
freight  rate  on  grain  from  New  York  was  13. 2d.  (28.4  cents) 
per  quarter  {28  pounds)  in  the  first  period  and  9s.  8d.  ($2.35) 
in  the  second  period,  an  increase  of  729  per  cent;  the  rate  on 
grain  from  Argentina  (down  river)  was  9s.  lod.  ($2.39)  per 
ton  during  the  first  period  and  140s.  6d.  ($34.19)  during  the 
second  period,  an  increase  of  1.329  per  cent.^ 

Since  war  commenced  ocean  freight  rates  per  ton  rose  as 
follows  :^ 

Endofi9i6  Endofigis  End  of  1914  End  of  1913 

Per  ton  Per  ton  Per  ton  Per  ton 

River  Plate  to  U.  K 145/0  120/0  45/0  12/0 

Bombay  to  p.  p •  230/0  11 1/3  22/0  18/0 

United  States — 

Atlantic  Ports  to  L.  H. 

(cotton) 260/0  262/6  90/0  30/0 

Atlantic  Ports  to  U.  K. 

(grain) 74/6  79/0  33/10  7/10 


Average 177/4  118/2  47/8  16/11 

Figures  taken  from  the  report  of  the  American  consul  in 
Liverpool  compare  certain  rates  prevalent  before  the  war 
with  those  charged  in  December,  1916:  Cardiff  to  River 
Plate,  $3.73  and  $13.37;  River  Plate  to  United  Kingdom, 
$4.39  and  $27.98;  Bombay  to  United  Kingdom,  $4.60  and 
$57.17;  Calcutta  to  United  Kingdom,  $5.96  and  $66.89.2 

In  1 91 7  the  homeward  River  Plate  fluctuated  a  little,  being 
125s.  from  the  lower  ports  for  discharge  in  the  United  Kingdom 
when  the  year  opened,  rising  later  to  140s.  from  Buenos  Aires 
or  La  Plata  and  145s.  from  up-river  to  Great  Britain.  In 
1 91 4  this  voyage  was  valued  at  i8s.  6d.  Heavy  grains  from 
the  Northern  Range  of  America  fixed  for  neutrals  at  30s. 
to  40s.  per  qr.  to  the  United  Kingdom. 

•  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  February,  1918,  p.  113. 
^  "Wholesale  Prices  of  Commodities  in  1916,"  Journal  of  the  Royal  Statistical 
Society,  March,  1917,  p.  294. 

'Commerce  Reports,  Annual  Series  No.  19b,  November  i,  1917. 


60  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

Business  which  fixed  in  1914  from  Bombay  on  the  dead 
weight  basis  at  19s.  could  only  be  done  at  200s.  at  the  begin- 
ning of  191 7,  and  later  the  figure  rose  to  300s.  with  400s, 
quoted  to  the  Mediterranean. ^ 

The  editor  of  the  Journal  of  the  Royal  Statistical  Society 
considers  that  the  rise  in  freights  was  brought  about  mainly 
by  the  action  of  the  British  Government  in  commandeering 
and  requisitioning  for  war  purposes  a  considerable  propor- 
tion of  the  British  merchant  marine. ^ 

To  this  cause,  which  obviously  shortened  the  amount  of 
British  shipping  available  for  mercantile  purposes,  may  be 
added  the  destruction  of  many  vessels  by  submarines,  the 
increased  cost  of  working  ships,  the  congestion  at  the  docks 
and  the  extra  large  profits  made  by  the  owners  of  liners  and 
of  tramps. 

Through  191 7  Great  Britain  experienced  a  gradually  in- 
creasing state  control  of  shipping.  The  extent  of  the  govern- 
ment's requirements  in  tonnage  was  indicated  by  Sir  L. 
Chiozza-Money  (Parliamentary  Secretary  to  the  Ministry 
of  Shipping)  in  the  House  of  Commons  on  May  10,  when  he 
stated  that  of  the  total  tonnage  available  92  per  cent  had 
been  placed  at  the  disposal  of  the  Food  Controller,  the  War 
Office,  the  Admiralty  and  the  Ministry  of  Munitions.^ 

Increased  freight  rates  do  not  apply  to  this  requisitioned 
tonnage,  as  it  has  been  taken  over  by  the  government  at 
prewar  rates  of  freight,  "although  since  the  commencement 
of  the  war  the  cost  of  repairs  has  trebled,  the  cost  of  marine 
insurance,  inclusive  of  war  risks,  and  also  the  cost  of  stores 
and  provisions,  have  increased  in  the  same  proportions."* 
The  government  paid  in  June,  191 7,  6s.  6d.  ($1.58)  per  ton 
per  month  to  British  shipowners  under  requisitioned  condi- 
tions, while  neutral  tonnage  was  being  chartered  at  50s. 
($12.17)  per  ton  per  month. ^ 

'  Chamber  of  Commerce  Journal  Trade  Review,  January,  1918,  p.  3. 
2  Journal  of  the  Royal  Statistical  Society,  March,  1917,  p.  294. 
^  Chamber  of  Commerce  Journal  Trade  Review,  January,  1918,  p.  3. 
*  Industrial   Unrest  in  Great  Britain,  Bulletin  of  the  U.  S.  Bureau  of  Labor 
Statistics,  No.  237,  p.  181. 
'  Ibid.,  p.  181. 


GREAT   BRITAIN  6l 

It  is  exceedingly  difficult  to  establish  the  relationship  be- 
tween the  rise  in  freight  rates  and  the  increased  cost  of  goods. 
In  a  debate  in  the  House  of  Commons  on  August  22  and  23, 
1916,  Mr.  Winston  Churchill  attacked  shipowners  who,  ac- 
cording to  him,  by  extorting  enormous  profits,  were  raising 
the  price  of  commodities;  he  advocated  governmental  control 
of  the  shipping  industry.  Mr.  Houston,  in  reply,  stated  that, 
"although  by  arrangement  with  the  Board  of  Trade  and  the 
shipowners  of  the  country"  the  whole  of  the  refrigerating 
tonnage  employed  in  the  carriage  of  meat  to  Great  Britain 
"was  fixed  at  a  rate  of  freight  which  did  not  exceed  the  pre- 
war rates  more  than  |  of  a  penny  to  ^d.  per  pound,  the  prices 
of  meat  have  risen  enormously."'  Mr.  Pretyman  gave  fig- 
ures which  showed  that  if  at  the  outbreak  of  the  war  the  4 
pound  loaf  was  5^d.  and  in  August,  1916,  Qd.,  the  rise  in 
freights  represented  only  id.  out  of  3^d.  advance  in  the  price. ^ 
In  October,  1916,  Mr.  Runciman  pointed  out  that  less  than  a 
half  penny  out  of  the  4d.  or  5d.  rise  in  the  price  of  meat  went 
for  higher  cost  of  carriage. ^ 

In  considering  the  causes  of  increased  meat  prices,  the 
Board  of  Trade  committee  reported  that  because  of  systematic 
shipping  arrangements  made  by  the  government,  freight 
rates  do  not  constitute  the  main  item  in  the  increased  cost  of 
imported  meat,  the  average  amount,  including  the  increase 
during  the  war,  being  not  more  than  id.  per  pound.  The 
report  mentions  limitations  of  means  of  transport  as  one  of 
the  reasons  for  high  prices,  the  last  named  factor  including  the 
handling  of  cargoes  in  port  and  by  rail  and  the  frequent  conges- 
tion in  the  docks,  which  so  seriously  limited  the  working  power 
of  ships  and  thus  reduced  amount  available  for  civilian  use.^ 

Most  of  the  food  is  brought  to  Great  Britain  by  British 
owned  steamers  at  the  requisitioned  rate  and  the  anomaly 
has  been  pointed  out  of  Argentina  wheat  not  having  been 
lowered  in  price,  though  shipped  to  British  Isles  at  blue  book 

1  The  Economist,  August  26,  1916,  p.  355. 
^  The  Nation,  October  21,  1916. 

'  Report  (interim)  of  the  Board  of  Trade  committee  on  prices,  Cd.  8358,  1916, 
p.  10. 


62  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

rates. ^  In  June,  191 7,  it  was  authoritatively  stated  that 
freights  accounted  for  only  |d.  (1.5  cents)  in  the  price  of  a 
4  pound  loaf  and  id.  (2  cents)  per  pound  in  meat.^ 

It  is  obvious  from  the  above  that  one  must  accept  with  a 
great  deal  of  caution  the  contention  of  Sir  George  Paish  that 
one-half  of  the  rise  in  prices  in  191 5  and  191 6  was  due  to  rise  in 
freights,^  or  the  statement  of  the  editor  of  the  Journal  oj  the 
Royal  Statistical  Society  that  the  rise  of  prices  in  191 6  was  due, 
in  a  large  measure,  to  a  continuous  advance  in  freight  rates.'* 

The  cost  of  insurance  against  war  risk  has  increased  con- 
siderably since  Germany  started  her  ruthless  submarine  cam- 
paign. Lloyds  during  the  first  part  of  191 7  demanded  25 
per  cent  for  war  risk  insurance  on  a  three  months  voyage. 
"The  effect  of  a  25  per  cent  war  risk  insurance  on  a  cargo 
worth  £50,000  carried  in  a  ship  worth  £150,000,  a  total  of 
£200,000  ($973,300),  with  superadded  cost  of  insurance, 
£50,000  ($243,325)  is  to  double  the  costs  of  the  cargo. "^  No 
actual  premiums  are  paid  by  the  government  for  insuring  its 
requisitioned  shipping,  but  it  has  to  see  to  it  that  its  risks  are 
covered  and  its  losses  recouped.  In  the  opinion  of  the  com- 
missioners for  Wales  appointed  to  inquire  into  the  causes  of 
industrial  unrest,  the  cost  of  war  risk  insurance,  especially 
for  food  supplies,  ought  not  to  be  borne  by  the  cargo,  but 
should  be  regarded  as  general  war  expenditure  and  be  met 
accordingly.^ 

Taxation 

Taxation  played  some  part  in  the  increase  of  prices.  This 
has  been  particularly  true  in  the  case  of  indirect  taxes,  such 
as  license  and  customs  duties.  Thus  of  the  increase  of  87  per 
cent  noted  on  January  i,  1917,  above  the  prices  of  July,  1914, 
about  6  per  cent  was  due  to  additional  taxation  on  tea  and 
sugar. ^     On  the  other  hand,  taxation  tended  to  lower  prices 

^  Commerce  Reports,  Annual  Series,  No.  19b,  November  i,  1917. 
"^  Bulletin  of  the  U.  S.  Bureau  of  Labor  Statistics,  No.  237,  p.  181. 
^  H.  S.  Foxwell:  "Ways  and  Means,"  The  Economic  Jojirnal,  March,  1916,  p.  18. 

*  Journal  of  the  Royal  Statistical  Society,  March,  1917,  p.  294. 

*  Bulletin  of  the  U.  S.  Bureau  of  Labor  Statistics,  No.  237,  p.  181. 
^  Ibid.,  p.  181. 

^  Commerce  Reports,  October  12,  1917,  p.  6. 


GREAT    BRITAIN  63 

in  SO  far  as  it  acted  as  a  check  on  consumption.  By  resorting 
mostly  to  loans  and  not  to  taxation,  the  government  failed  to 
exercise  its  great  weapon  of  finance  in  this  direction.  "By 
rationing  the  buying  power  of  the  citizen  by  drastic  taxation, 
the  Chancellor  might  have  greatly  reduced  the  need  for 
control  and  its  consequent  friction."^ 

Money  taken  in  taxation  leads  to  personal  retrenchment. 
Money  taken  in  loans  permits  the  population  to  spend  more 
nearly  as  usual;  this  spending  because  of  simultaneous  gov- 
ernmental demand  and  of  decreasing  supplies  brings  about  a 
rise  of  prices. ^ 

The  initial  cause  of  the  rise  in  prices,  writes  the  Economist, 
was  the  financial  policy  of  the  government,  which  has  relied 
too  much  on  loans — largely  credit  loans — and  too  little  on 
taxation  designed  to  check  unnecessary  consumption.^ 

To  be  effective,  taxation  must  be  applied  not  only  to  large 
incomes.  While  increased  money  in  the  hands  of  the  wealthy 
leads  to  a  relatively  larger  demand  for  luxuries,  the  major 
part  of  their  incomes  is  invested  in  "capital  goods."  What 
is  needed,  according  to  Professor  Cannan,  is  a  tax  on  all  in- 
comes which  give  a  margin  over  absolutely  necessary  expendi- 
tures; only  such  a  taxation  will  act  as  a  factor  reducing  the 
price  of  necessaries.'* 

Hoarding  by  the  Consumer 

A  certain  amount  of  hoarding  by  the  consumer  is  men- 
tioned by  some  as  an  additional  cause  of  high  prices.^  How- 
ever great  may  have  been  the  effect  of  this  cause  during  the 
panic  which  occurred  in  the  first  two  weeks  of  the  war,  and 
however  spectacular  may  have  been  some  cases  of  hoarding 
discovered  by  police  officials,  who  searched  the  residences  of 
suspects,  hoarding  by  consumers  has  hardly  exercised  any 
appreciable  influence  in  raising  prices. 

1  The  Economist,  February  16,  1918,  p.  256. 
'  Letter  to  The  Economist,  October  30,  19 16,  p.  569. 
'  The  Economist,  September  i,  19 17,  p.  316. 

*  E.  Cannan:  "  Industrial  Unrest,"  The  Economic  Journal,  December,  I9i7,p.463. 
'  H.  S.  Foxwell:  "  Inflation,"  Journal  of  the  Institute  of  Actuaries,  October,  1917. 
p.  278. 


CHAPTER   IV 

Profiteering 

In  discussing  the  dangers  of  governmental  regulation  of 
food,  the  Spectator^  asserted  that  it  was  very  doubtful 
whether  there  would  have  been  any  political  outcry  with 
regard  to  high  prices  but  for  the  theory  that  the  rise  was 
due  to  the  wicked  machinations  of  the  "profiteer." 

The  journal  attacks  the  halfpenny  press  for  pandering  to 
the  prejudice  of  its  readers  by  continually  suggesting  that  high 
food  prices  are  the  result  of  combinations  and  speculations  of 
the  profiteers,  the  Labor  members  in  Parliament  and  labor 
agitators  outside  of  it  acting  in  a  similar  spirit.^  It  deplores 
the  whole  outcry  about  food  prices  as  one  of  the  worst  examples 
of  the  way  in  which  interested  persons  will  lend  themselves 
to  a  popular  agitation  without  the  least  regard  to  the  real  facts. 
I  '  If,  according  to  this  periodical,  one-tenth  of  the  public 
[  money  that  has  been  devoted  to  the  war  savings  campaign 
and  the  food  economy  campaign  had  been  spent  upon  a  cam- 
paign to  teach  the  mass  of  the  people  the  elementary  laws 
governing  the  movement  of  prices,  a  great  deal  of  the  present 
social  bitterness  would  have  been  entirely  avoided.^ 

The  Statist  does  not  consider  profiteering  a  weighty  factor 
in  raising  prices;  it  is  rather  a  symptom  of  prevailing  condi- 
tions. Because  of  shortage  in  the  world's  food  supplies  and 
the  inflated  condition  of  the  currency,  high  prices  are  inevi- 
table, and  "when  there  is  a  tendency  for  prices  to  rise  it  is 
natural  that  speculators  should  take  advantage  of  the  tend- 
ency and  force  the  rise  higher  and  quicker  than  it  otherwise 
would  go. "^ 

While  admitting  that  to  some  extent  strategies  of  unscrupu- 

■     '  1  The  Spectator,  August  4,  19 17,  p.  109. 
2  Ibid.,  October  21,  1916,  p.  465. 
'  Ibid.,  July  28,  1917,  p.  79. 
■•  The  Statist,  February  6,  19 15,  p.  206. 

64 


GREAT   BRITAIN  65 

lous  profit  seekers  may  have  been  active  during  the  war,  the 
Saturday  Review  considers  that  charges  made  against  them  are 
unaccompanied  by  evidence.  "Federated  scoundrels  can 
not  have  ruled  over  all  markets,  yet  the  price  of  all  commodi- 
ties has  gone  up  and  up."' 

Professor  Cannan's  opinion  is  similar  to  those  mentioned 
above.  He  speaks  of  the  disappointment  of  the  working  men 
who  have  now  more  money  to  spend  and  who  in  spending 
it  raise  prices  against  themselves.  Notwithstanding  higher 
wages,  the  working  men  are  not  as  much  better  ofif  as  they 
expected  and  some  of  them  are  even  worse  off  than  they  were 
before;  they  are  naturally  disappointed  and  complain  of  being 
exploited  by  profiteers.  Newspapers  see  good  copy.  Articles 
appear  explaining  that  the  rise  of  prices  is  due  solely  to  the 
machinations  "of  such  or  such  a  ring."^ 

According  to  Mr.  Shadwell,  the  abnormal  state  of  the  mar- 
ket affords  unusual  opportunities  and  temptations  to  unscru- 
pulous persons.  He  favors  a  watchful  lookout  for  malpractices 
which  may  aggravate  existing  conditions,  but  expresses  the 
view  that  "to  regard  such  malpractices  as  the  main  cause  of 
high  prices  is  to  misconceive  the  whole  problem."^  Accord-j 
ing  to  him,  popular  discontent  against  high  prices  has  been 
excited  not  so  much  by  the  rise  itself  as  by  the  belief,  assidu-j 
ously  inculcated,  that  it  is  caused  by  manipulation  of  the, 
market  and  could  be  easily  prevented  by  summary  measures 
of  control.^ 

That  high  profits  should  be  regarded  rather  as  a  result  than  I 
a  cause  of  high  prices  is  maintained  by  the  Nation:  "The| 
increased  supply  of  money  which  the  government  by  its  buy- 
ing pumps  into  the  business  system  operates  everywhere  to 
set  more  purchasing  power  in  action.  .  .  .  The  higher 
prices  thus  generated  must  express  themselves  in  higher 
profits  or  higher  wages,  or   in    higher   prices    for  the  tools 

1  The  Saturday  Review,  September  2,  1916,  p.  217. 

^  E.  Cannan:  "  Report  on  Food  Prices,"  The  Economic  Journal,  December,  1916, 

P-  474- 

'A.  Shadwell:  "Food  Prices  and  Food  Supply,"   The  Nineteenth  Century  and 
After,  April,  191 7,  p.  727. 

*  Ibid.,  p.  727. 


66        PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

and  materials  used  in  the  various  processes  of  production." 
The  journal  admits  that  where  there  is  artificial  or  contrived 
scarcity  as  in  shipping,  a  bigger  slice  is  taken  as  profits.^ 

As  to  the  views  of  statesmen,  Mr.  McKenna,  in  assigning 
the  general  rise  in  prices  as  one  of  the  foremost  causes  of 
labor  unrest,  remarked  that  the  main  reason  for  that  rise 
was  not  profiteering  but  "  inflation, "^  and  Mr.  Runciman,  in 
speaking  in  the  House  of  Commons  in  August,  191 7,  declared 
that  the  chief  cause  of  the  increase  in  prices  was  not  to  be 
found  among  profiteers — carriers  or  producers.^ 

The  Board  of  Trade  Prices  Committee  conducted  a  careful 
investigation  of  specific  charges  of  profiteering;  the  only 
positive  results  which  it  obtained  and  which  are  embodied  in 
its  final  report  were  as  follows:^  "In  the  autumn  of  1916 
prices  for  potatoes  were  demanded  by  dealers  very  greatly 
in  excess  of  cost  of  production  or  cost  of  purchase  from 
farmers.  .  .  .  There  was  a  real  scarcity  and  the  rush  of 
retailers  ran  the  price  up,  as  with  fish.  In  the  spring  of  1916 
one  tea  broker  was  guilty  of  speculative  overbuying;  this  had 
an  influence  in  the  direction  of  raising  prices." 

The  committee  was  appointed  on  June  17,  191 6,  by  the 
President  of  the  Board  of  Trade  to  report  on  the  supply  and 
prices  of  foods.  The  first  report,  a  preliminary  one  on  milk, 
meat  and  bacon,  was  made  on  September  22,  1916.  The 
second  report,  on  bread,  flour  and  wheat,  and  the  third,  on 
sugar,  tea  and  potatoes,  were  presented  in  November  and 
December,  respectively,  but  they  were  not  published  till  the 
spring  of  1917. 

With  regard  to  the  rise  in  the  price  of  milk,  the  committee 
found  that,  while  combination  among  farmers  has  helped 
to  secure  the  higher  prices,  it  was  mainly  an  increase  in  de- 
mand and  an  increased  cost  of  production  that  have  been 
responsible  for  the  rise.  In  particular  the  increased  demand 
of  the  producers  of  margarin,  tinned  milk  and  milk  chocolate, 

1  The  Nation,  October  21,  1916. 
^^  The  Economist,  July  28,  191 7,  p.  iii. 
'  The  Liberal  Magazine,  August,  19 17,  p.  363. 
*  The  Nineteenth  Century,  April,  191 7,  pp.  742-743. 


GREAT    BRITAIN  67 

together  with  that  of  the  hospitals,  has  helped  to  force  up 
prices.  The  increased  price  of  cheese  has  had  a  similar  effect. 
The  gains  made  through  high  war  prices  have  gone,  accord- 
ing to  the  committee's  report,  chiefly  to  the  primary  produ- 
cers. That  retail  dairying  in  London  has  of  late  years  been 
a  much  less  profitable  business  than  formerly  is  sufficiently 
indicated  by  the  evidence  which  has  been  produced  to  the 
committee  by  a  number  of  the  principal  firms  in  the  trade. 
On  the  other  hand  the  business  of  wholesale  distribution  must 
be  held  to  have  prospered.  A  prospectus  issued  by  United 
Dairies,  Ltd.,  formed  in  191 5  to  combine  a  number  of  whole- 
sale concerns,  announced  that  for  the  year  ending  April  3, 

1 91 5,  their  combined  profits,  after  providing  for  all  establish- 
ment charges,  depreciation,  directors'  remuneration,  interest 
on  debentures  and  the  dividend  of  6  per  cent  on  the  issued 
preference  shares  of  the  company,  "would  have  been  more 
than  sufficient  to  pay  a  dividend  of  14  per  cent  on  its  issued 
ordinary  shares."  It  should  be  noted,  however,  that  these 
profits  are  asserted  by  the  company  to  have  been  largely 
made  in  the  manufacture  of  dairy  utensils  and  of  condensed 
milk,  cheese  and  cream,  and  it  is  even  claimed  that  the 
largest  of  the  combined  companies  lost  heavily  on  Its  milk 
distribution  in  London  during  the  eighteen  months  ended 
March,  191 6.  It  would  appear  that  the  rise  in  wholesalers' 
milk  prices  has  been  roughly  parallel  to  the  rise  in  the  farmers' 
contract  prices.^ 

Costs  of  distribution  in  London  and  large  towns  generally 
form  the  largest  item  in  the  price  after  the  milk  leaves  the 
farmer.  In  provincial  towns  before  the  war  the  cost  of 
delivery  was  reckoned  at  about  4^d.  to  6d.  per  gallon. 
In  the  case  of  certain  farmers'  cooperative  societies,  who 
collect  milk  and  sell  direct  to  the  consumer,  organization 
is  alleged  to  have  already,  in  some  areas,  effected  a  con- 
siderable reduction  in  charges.  It  is  calculated  by  one 
farmers'  milk  supply  association,  which  sold   in  a  small   town 

1  Interim  report  of  Great  Britain  Board  of  Trade  Committee  on  Prices,  Cd.  8358, 

1916,  pp.  12-13. 


68  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

in  Lancashire  over  £4,500  worth  of  milk  in  191 5,  that  the  cost 
of  distribution  from  the  depot  to  the  consumer  is  nearly  /\d. 
per  gallon.  Even  on  this  basis,  however,  it  hardly  appears 
that  the  higher  charge  for  town  distribution  is  exorbitant,  the 
process  there  consisting  in  a  multitude  of  deliveries,  involving 
relatively  more  labor.  Under  present  conditions,  the  average 
cost  in  London  must  apparently  be  reckoned  at  at  least  6d. 
per  gallon  and  dairymen  contend  that  it  is  considerably  more. 
It  has  been  reckoned  that  London  dairymen  could  still  afford 
to  sell  at  id.  per  quart  less  over  the  counter  than  is  charged 
for  milk  delivered  to  the  customer.  But  by  far  the  greater 
amount  of  milk  is  sold  by  delivery;  and,  except  in  the  poorer 
districts,  there  is  no  likelihood  that  a  sufficient  number  of 
customers  to.  make  a  business  pay  would  consent  to  go  or 
send  for  their  milk  in  the  early  morning. 

Concerning  profits  on  meat,  the  committee  has  the  follow- 
ing to  say : 

It  may  be  taken  as  certain  that  considerably  increased 
profits  have  been  made  during  the  war  by  cattle  breeders  in 
the  United  Kingdom  and  in  foreign  countries,  especially  in 
South  America.  This  is  the  first  main  item  in  the  increase  of 
price;  and  as  regards  the  cattle  breeders  of  the  United  King- 
dom it  is  partly  offset  by  the  increased  cost  of  labor  and  of 
feeding  stuffs.  An  increased  amount  of  capital  being  thus 
involved  in  the  handling  of  the  product  at  each  stage,  it  may 
be  assumed  that  additional  profits  have  been  reaped  at  some 
of  them. 

So  much  has  been  said  of  the  large  profits  of  meat  trusts  and  other  meat  dealers 
that  the  committee  have  been  at  special  pains  to  investigate  in  that  direction. 
One  of  the  two  British  companies  (in  Argentina)  has  paid  a  125  per  cent  dividend 
for  1915,  besides  putting  £100,000  to  reserve.  In  1914  that  company  had  paid  no 
dividend.  .  .  .  The  other  British  company  showed  a  total  profit  of  over 
£142,000  in  1915  as  compared  with  less  than  £26,000  in  1914,  and  a  loss  in  1913. 
.  .  .  Details  of  the  dividends  of  the  "  British  American"  meat  firms,  which  are 
private  companies,  are  not  available  to  the  committee,  but  it  was  admitted  by  a 
representative  of  one  of  these  companies  that  profits  had  been  made  in  19 14-15  after 
two  years  of  loss  in  1912-13.  On  the  whole,  no  such  profits  appear  to  have  been 
made  in  the  meat  importing  trade  as  are  recorded  in  some  of  the  leading  "war 
industries."     .     .     .     The  substantial  cause  of  increased  profits  is  rather  the  short- 


GREAT    BRITAIN  69 

age  of  supply  than  any  process  of  combination,  and  but  for  the  government  control  of 
colonial  meat,  prices  might  be  higher.  Reduction  of  prices  at  foreign  and  home 
sources  of  supply  is  obviously  difficult  under  existing  circumstances.^ 

Although  bacon  prices  have  risen  considerably  less  than 
those  of  other  meat  (about  46  per  cent  on  the  average  as  be- 
tween July,  1914,  and  September,  1916),  there  has  been 
relatively  more  excitement  concerning  them  than  has  been 
shown  with  regard  to  other  foods.  This  appears  to  be  due 
to  the  fact  that  in  the  early  part  of  the  summer  a  large  quan- 
tity of  American  bacon  was  put  in  cold  storage  in  Liverpool, 
the  inference  being  drawn  that  there  was  a  design  to  force  up 
prices  artificially.  In  view  of  this  and  other  commonly  ex- 
pressed opinions  as  to  the  operation  of  "rings"  in  the  bacon 
trade,  the  committee  have  made  a  searching  investigation 
without,  however,  finding  any  proof  that  any  serious  infla- 
tion of  prices  has  been  so  produced. 

Although  a  large  quantity  of  American  bacon  was  put  in 
cold  storage  in  191 6,  it  was  part  of  an  unusually  large  im- 
portation, and  cold  storing  was  practically  a  necessary  step. 
Reliable  evidence  has  been  given  to  the  effect  that  quantities 
of  American  bacon  have  been  sold  in  England  during  the 
summer  at  an  actual  loss  to  the  American  packer. - 

The  South  Wales  Commissioners  of  Inquiry  into  Indus- 
trial Unrest  who  tried  to  find  out  "who  and  what  causes  are 
really  responsible  for  the  great  increase  in  the  cost  of  the 
food  supplies"  had  to  "exonerate"  retailers,  shipowners 
and  bakers.* 

In  the  case  of  bread,  the  precise  amount  of  money  taken 
at  each  stage  has  been  worked  out  by  Mr.  R.  J.  Torner.  He 
took  Canadian  wheat,  marketed  at  Winnipeg,  at  a  time  when 
it  was  delivered  in  London  at  72s.  a  quarter  and  bread  was 
9§d.  the  4-pound  loaf.    The  result  was  as  follows: 

^  Interim  report  of  the  Great  Britain  Board  of  Trade  Committee  on  Prices, 
pp.  lO-II. 

^  Ibid.,  p.  13. 

'  E.  Cannan:  "Industrial  Unrest,"  The  Economic  Journal,  December,  1917, 
p.  461. 


70  PRICES    AND    PRICE    CONTROL    DURING   THE   WAR 

Per  Quarter  Per  Loal 

Price  obtained  by  farmer 50s.  5d. 

Lake  and  rail  transport  and  elevator  charges 6s.  f  d. 

Commission  to  dealers,  brokers  and  shippers is.  3d.  |d. 

Insurance  to  London is.  3d.  |d. 

Freight 12s.  ijd. 

London  commissions  &  exchange is.  3d.  jd. 

Cost — 2\d.  per  loaf  to  London,  leaving  2jd-  to  meet  all  expenses  after  arrival 
(this  includes  transportation  to  the  mill,  grinding,  transportation  to  the  baker, 
baking,  delivery  and  the  "  middlemen. ")i 

From  the  preceding  it  is  obvious  that  if  "profiteering" 
means  the  holding  up  of  supplies  for  the  purpose  of  forcing 
up  prices,  if  it  stands  for  plunging  into  this  or  that  market 
in  order  to  obtain  speculative  gains  out  of  national  needs,  then, 
all  the  mob  oratory  and  public  agitation  notwithstanding, 
there  has  been  very  little  profiteering  in  England.  The  subject 
has  been  carefully  investigated  by  competent  parties  and 
hardly,  if  ever,  were  there  found  evidences  of  any  material 
amount  of  pure  speculation.  "It  may  have  been  practised  lo- 
cally and  in  a  small  way,  but  even  that  has  not  been  proved."-^ 

If  on  the  other  hand  "profiteering"  means  the  securing  in 
the  ordinary  course  of  business  of  a  margin  of  profit  on  the 
goods  offered  for  sale,  if  profiteering  is  equivalent  to  taking 
advantage  of  market  conditions  to  make  money  without 
any  illegitimate  maneuvering,  then  no  doubt  there  has  been  a 
great  deal  of  so-called  profiteering,  for  a  great  deal  of  money 
has  been  made.-  But,  as  has  been  asked,  "will  those  who 
denounce  profiteering  be  prepared  to  compensate  the  profit- 
eer when  the  market  turns  against  him  and  he  suffers  a  loss?"^ 
And  if  in  the  case  of  the  small  shopkeeper,  the  food  dealer,  it 
were  possible  to  get  rid  of  "profiteering"  by  fixing  prices  on 
the  basis  of  "prewar  profits,"  would  this  be  just?  Why 
should  the  retail  dealer  be  restricted  to  prewar  profits,  while 
the  wage  earners  claim  and  receive  special  wages?  Has  not 
his  cost  of  living  gone  up?^ 

Some  idea  of  the  rise  in  profits  since  the  beginning  of  the 
war  may  be  gained  from  the  returns   to   the   excess   profits 

'Shadwell,  op.  cit.,  p.  743. 

2  Ibid. 

'  The  Quarterly  Review,  July,  1917,  p.  49. 

■•  The  Spectator,  August  4,  1917,  p.  no. 


GREAT    BRITAIN  7 1 

tax  and  the  income  tax.  In  1914  income  and  property  tax 
(with  supertax)  yielded  £47,000,000,  in  191 7  £205,000,000. 
Excess  profits  duty,  nil  in  1914,  in  1917  yielded  £140,000,000. 
While  admitting  that  there  are  certain  difficulties  in  the  cal- 
culations of  the  rise  in  profits — as  there  are  no  returns  of 
any  Capital  Gazette — Professor  Nicholson  expresses  the  view- 
that  there  can  be  no  doubt  as  to  the  altogether  abnormal  rise.^ 

A  certain  amount  of  light  on  the  question  of  profits  and 
profiteering  is  shed  by  the  investigations  of  the  Economist 
into  the  earnings  of  joint-stock  undertakings;  these  undoubt- 
edly represent  only  a  proportion  of  the  industry  and  commerce 
of  the  country,  and  many  joint-stock  enterprises  are  not  in- 
cluded in  the  Ecofiomisfs  summaries,  but  nevertheless  the 
tables  presented  by  this  periodical  are  illuminating  and  will 
repay  a  careful  study. 

The  net  profits  of  928  companies  whose  reports  appeared 
in  the  Economist  in  1915  declined  from  £69,134,726  in  1914 
to  £66,926,983  or  3.2  per  cent.  The  profits  of  932  companies 
whose  reports  appeared  in  1916  were  £86,587,823,  showing 
an  increase  of  £19,357,781  or  28.6  per  cent  as  compared  with 
the  previous  year.  The  average  profit  per  company  in  191 6 
was  £93,000  against  £72,100  in  1915  and  £76,000  in  1914. 

If  one  compares  the  summary  of  net  profits  for  the  year 
ended  June  30,  1917,  with  the  preceding  year,  one  finds  a 
decline  in  the  percentage  increase  of  profits;  they  rose  from 
£'7^>773>7^3  to  £82,065,792  or  16.0  per  cent,  instead  of  28.6 
per  cent  as  they  did  in  the  calendar  year  1916.^  This  was 
due  not  to  a  falling  off  in  earning  power  but  to  the  fact  that 
in  19 16  uncertainties  as  to  amounts  due  for  excess  profits 
taxation  have  to  a  large  extent  been  cleared  up,  and  many 
companies  which  a  year  ago  made  a  reserve  for  the  duty  have 
this  time  deducted  the  amount  before  striking  the  profit 
figure. 

The  reports  of  1,200  companies  for  the  calendar  year  1917 
record  a  still  further  drop  in  the  proportionate  rise  of  profits. 

^  J.  S.  Nicholson:  "Statistical  Aspects  of  Inflation,"  Journal  of  the  Royal  Statis- 
tical Society,  July,  1917,  p.  479. 

^  The  Economist,  January  6,  1917,  p.  7. 

6 


72  PRICES   AND    PRICE   CONTROL   DURING    THE   WAR 

The  increase  was  from  £82,537,238  to  £90,760,604  or  only 
10  percent.^ 

The  following  tables  summarize  the  results  of  the  Econo- 
mist's quarterly  investigations  since  January  i,  1914: 

Reports  Pub- 
lished in  No.  of  1914  1915  Increase  Decrease 
Quarter  Ended       Companies 

£  £  £      %  £  % 

March  31 293        20,796,280  19,799,226  991,054     4.8 

June  30 285        23,666,652  22,375,049  1,291,603     5.4 

September 30 .  ...  142         10,649,014  10,707,025    58,011  0.5 

December  31 ...  .  208         14,028,78014,045,683    17,903  1.3 

928        69,134,72666,926,983  2,207,743     3.2 

Reports  Published  in  No.  of 

Quarter  Ended  Companies  19 15                 19 16  Increase 

£                   £  £  % 

March  31 286  20,047,736  23,536,746  3,489,010  17.4 

June  30 311  23,791,858  33,924,702  10,132,844  42.6 

September  30 139  10,439,072  13,358,836  2,919,764  27.9 

December  31 196  12,951,376  15,767,539  2,816,163  21.8 

932  67,230,042     86,587,823     19,357,781     28.6 

Reports  Published  in  No.  of 

Quarter  Ended                    Companies  1916                1917  Increase 

£                 £  £  % 

March  31 253  21,073,682  23,616,670  2,542,988     12.0 

June  30 330  26,309,573  29,322,747  3,013,174     1 1 .4 

September  30 337  17,477,002  18,260,507  783,505       4-5 

December  30 380  17,676,981  19,560,680  1,883,699 

1,200  82,537,238     90,760,604       8,223,366     10. 0 

There  are  many  instances  of  exceptionally  large  profits 
made  by  individual  industrial  concerns;  thus  thirteen  cotton 
spinning  companies  in  Lancashire  have  made  during  the  last 
quarter  of  1917  and  the  first  quarter  of  1918,  £95,287.  The 
share  capital  of  these  concerns  amounts  to  £669,991,  with 
loans  of  £273,197.  After  allowing  for  depreciation  and 
interest  on  loans,  the  profit  on  share  capital  works  out  at 
over  45  per  cent  per  annum. - 

The  profits  of  Courtauld's,  Limited,  silk  and  artificial  silk 
yarn  manufacturers,  rose  from  £757,110  in  1915,  to  £1,099,- 


1  The  Economist,  January  6,  1917,  p.  7. 
^  Ibid.,  April  13,  191 8,  p.  599. 


GREAT   BRITAIN 


73 


078  in  1 91 6  and  £1,173,891  in  191 7.  For  the  past  two  years 
the  company  declared  a  dividend  of  30  per  cent.' 

The  twelve  boot  and  shoe  manufacturing  companies  whose 
reports  appear  in  the  Economist  have  raised  their  dividends 
from  5  and  6  per  cent  in  1914  to  10,  14^  and  17^  per  cent  in 
1917.2 

It  is  difficult  to  offer  precise  figures  with  regard  to  the 
amount  of  profits  earned  by  munitions  firms  subject  to  excess 
profits  duty  or  munitions  levy.  In  the  first  report  (session 
1918)  of  the  Committee  on  National  Expenditure  one  finds  a 
table  which  has  been  put  in  to  illustrate  one  year  of  control. 
It  appears  from  this  table  that  in  the  aggregate  26  firms  se- 
lected at  random  earned  during  that  year  nearly  five  times  the 
amount  of  their  standard  profit.  In  the  case  of  one  engineer- 
ing firm,  the  profit  was  340  per  cent  on  the  capital  as  it  stood 
on  the  books  of  the  company,  while  in  the  case  of  another  com- 
pany on  an  order  for  1,000  products,  priced  at  about  £4,000 
each,  the  profit  amounted  to  £1,300,000.^ 

The  second  report  of  the  Public  Accounts  Committee  of 
the  House  of  Commons,  No.  115,  1916,  speaks  of  clearly 
exorbitant  prices  demanded  from  the  government,  which 
led  to  threats  of  confiscation.  The  balances  of  many  indus- 
trial firms  show  that  they  doubled  their  profits. 

"Workington  Iron  and  Steel"  profits  were  £485,410  in 
1915-16,  an  excess  over  the  firm's  profits  in  1913-14  equal  to 
£278,839  or  135  per  cent;  "Calico  Printers'  Association" 
profits  were  £1,104,  73^  in  1915-16  as  compared  with  £443,786 
in  1913-14;  the  returns  from  a  shipbuilding  concern  showed  a 
187  per  cent  increase.^ 

Instances  of  exceptionally  large  individual  profits  can  be 
multiplied  indefinitely.  Shipping  interests  seem  to  have  fared 
particularly  well  since  the  outbreak  of  the  war.  The  profits 
of  Cunard  Company,  for  instance,  notwithstanding  the  loss 
of  passenger  traffic,  rose,   because  of  the  huge    increase   in 

1  The  Economist,  March  9,  1918,  p.  423^ 

2  Ibid.,  March  30,  1918. 

'  Iron  and  Coal  Trades  Review,  March  15,  1918,  p.  277. 

*  Vestnik  Evropi  {European  Messenger),  December,  191 6,  p.  268. 


74  PRICES    AND    PRICE    CONTROL    DURING   THE   WAR 

earnings  from  carrying  freight,  from  £853,374  in  1913  to 
£1,003,553  in  1914,  £1,347.357  in  1915  and  £2,339,752  in 
1916.^  As  to  dividends  on  tramp  steamers,  if  the  returns  on 
Mr.  Bonar  Law's  investment  in  single  ship  cargo  companies 
are  indicative  of  conditions  prevailing  in  tramp  traffic  in 
general,  the  possession  of  tramps  was  certainly  a  paying  propo- 
sition. On  £8,110  invested  by  Mr.  Bonar  Law  he  received, 
after  excess  profits  tax  had  been  paid,  £3,624  in  191 5  and 
£3,847  in  1916;  £7,471  on  £8,110  in  two  years. ^ 

A  study  of  the  profits  of  London  department  stores  is  of 
particular  interest,  as  it  is  indicative  of  the  large  measure  of 
general  prosperity  which  is  being  enjoyed  by  the  population 
of  the  metropolis.  In  many  instances  an  increase  in  the 
business  of  the  stores  is  limited  only  by  the  depletion  of  staffs 
and  by  the  inability  to  obtain  new  supplies. 

The  net  profits  o^  the  London  stores  during  the  last  five 
years  were  as  follows:^ 

Company  1913  1914  1915  1916  1917 

£  £  £  £  £ 

Army  and  Navy 193.739  226,909  196,554  210,097  241,366 

Civil  Service  Supply ..  .  44-911  39.031  43-391  48,363  55.722 

D.  H.  Evans 69,923  44.030  48-438  59-005  69,318 

Dickins  &  Jones 60,406  43.188  26,722  50,788  66,105 

Frederick  Gorringe ...  .  33,222  31-205  32.227  39-543  49.992 

Harrod's 295,181  309,227  202,884  235,046  282,293 

Jay's 40.857  18,061  12,222  15.197  15,917 

John  Barker 63,907  76,066  63,141  66,001  85,284 

Liberty  &  Co 61,534  30,272  13,257  37,787  46,780 

Maple  &  Co 206,930  133,402  117,267  158,051  285,401 

Mappin  &  Webb 54,250  25,639  Dr.  21,049  30,380  46,780 

Selfridge's 112,396  115,831  131,596  206,962  240,832 

Spencer,  Turner 37,i94  30,290  51-873  56,623  55-675 

Swan  &  Edgar 16,948  6,997  6,593  34-02I  39.365 

Thomas  Wallis 23,118  20,660  21,432  30,656  33,241 

William  Whiteley 70,632  59,545  55,48i  66,823  77,745 

1,385,050       1,210,353     1,001,031     1,347,343     1,706,655 

The  net  profits  of  the  above  companies  were  in  191 7 
£359,312  higher  than  in  1916,  and  £321,605  higher  than  in  the 
last  full  year  of  peace.    From  the  nature  of  the  goods  sold  it  is 

^  The  Economist,  April  21,  1917,  p.  692. 
2  Ibid.,  July  7,  1917,  p.  10. 
'  Ibid.,  April  20,  1918,  p.  633. 


GREAT   BRITAIN  75 

obvious  that  the  appeal  for  war  economy  has  been  woefully 
neglected  by  the  London  shopper.'  "Shops  and  stores  vie 
with  breweries,  hotels  and  restaurants  in  the  prosperity  which 
they  enjoy.  "- 

That  the  Economist  does  not  consider  retailers  responsible 
for  high  prices  is  apparent  from  the  remark  of  this  periodical 
that  "the  rise  in  prices  has,  of  course,  been  a  problem  which 
has  required  careful  handling  on  the  part  of  the  shop- 
keeper."^ The  retailers'  problem  has  been  that  of  shifting 
the  increased  price  to  the  customers,  at  the  same  time  main- 
taining their  trade.  The  London  stores  have  succeeded  in 
this,  in  many  instances  even  increasing  their  turnover.  The 
branch  shop  companies  have  not  fared  so  well  as  the  metro- 
politan department  stores,  although  their  profits  continued 
to  be  sufficient  to  permit  them  to  pay  dividends  varying  from 
6  per  cent  to  30  per  cent.^ 

In  a  fairly  representative  group,  which  includes  two 
clothing  and  hosiery  companies,  two  grocers  and  provision 
merchants,  two  confectioners,  two  boot  and  shoe  companies 
and  two  dairy  companies,  there  is  only  one  concern  which 
did  not  declare  any  dividends  between  1914  and  1916.  This 
company  is  Eastman's  wholesale  and  retail  butchers.  Their 
profits  fell  from  £72,964  in  1913  to  £32,588  in  1916.  The 
company  is  one  of  the  few  whose  trade  has  been  seriously 
curtailed  by  the  closing  of  shops,  because  of  the  lack  of  ex- 
perienced men  to  handle  the  business.  The  decline  of  profits 
in  1915  was  attributed  by  the  company  to  the  fact  that  since 
the  government  became  heavy  buyers  of  meat  prices  rose 
enormously.  Supplies  released  for  civilian  consumption 
"were  sold  at  the  highest  wholesale  prices  on  record,  and  it 
was  impracticable  to  advance  .  .  .  retail  prices  suffi- 
ciently to  earn  a  fair  margin  of  profit."^  Eastman's  net 
profits  rose  again  to  £50,442  in  1917.5 

'  The  Economist,  June  9,  1917,  p.  1063. 

2  Ibid.,  April  13,  1918,  p.  596. 

'  Ibid.,  May  12,  1917,  p.  804. 

*  Ihie.,  May  10,  1917,  p.  470;  May  12,  1917,  p.  804. 

^  Ibid.,  March  16,  1918,  p.  464. 


76  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

The  changes  in  the  amount  of  profits  made  by  the  branch 
companies  since  19 13  were  as  follows: 

Net  Profit 

1913  1914             1915  1916  1917 

£  £                 £  £  £ 

Chas.  Baker  &  Co 17,634  12,749          17,488  15,967  15,349 

Eastman's 72,964  47,225          41.136  32,588  60,441 

Freeman,  Hardy&  Willis          90,330  97,338  103,104  118,006 

Fuller's 13,475  5,653            8,978  8,702  12,501 

Home  and  Colonial 179,486  225,828  251,657  256,877  226,156 

Hope  Brothers 41,553  35,122          27,261  ^51,780  58,171 

International  Tea  Stores          99,000  132,733  163,874  109,619  140,887 

J.  Sears  &  Co 55,3i2  61,634         75,679  65,321 

Maynard's 10,716  12,202          13, 733  26,512  43,322 

Maypole  Dairy 481, 555  488,026  528,275  462,751  736,354 

Welford's  Surrey  Dairies          20,417  19,724         22,088  17,470 

*  Eighteen  months. 

These  profits  have  permitted  them  to  declare  the  following 
dividends : 

Dividends 
1913    1914    1915    1916    1917 

%  %  %  %  % 

Chas.  Baker  &  Co 6J  3  7§  8  8 

Eastman's 4  nil  nil  nil  5 

Freeman,  Hardy  &  Willis 15  15  ijh  175 

Fuller's 17^  10  7i  7I  10 

Home  &  Colonial 20  25  30  30  30 

Hope  Brothers 6  5  4  6  8 

International  Tea  Stores 8  9  10  7  10 

J.  Sears  &  Co 12^  17I  17I  175 

Maynard's 10  10  10  20  40 

Maypole  Dairy 1625  100  100  25  125 

Welford's  Surrey  Dairies 8  8  8  6 

The  net  profits  of  Lipton,  Limited,  which  dropped  from 
£183,488  in  1914  to  £122,673  in  1915,  rose  to  £169,444  in 
1916  and  to  £302,587  in  191 7,  the  highest  point  in  the  com- 
pany's history.^ 

In  order  to  meet  any  possible  criticism  on  the  part  of  the 
consumer  that  these  results  were  obtained  at  his  expense  and 
in  order  to  show  that  high  prices  do  not  necessarily  mean  high 
profits,  the  directors  state  that  "by  selling  goods  of  the  highest 
standard  of  quality  at  the  lowest  possible  prices,  the  com- 
pany's shops  are  more  popular  than  ever  and  hundreds  of 
thousands  of  new  customers  have  been  attracted   thereto, 

^  The  Economist,  June  2,  1917,  p.  1026. 


GREAT    BRITAIN  77 

and  the  very  much  larger  turnover  consequent  thereon  has 
resulted  in  substantially  increased  earnings."  Nevertheless, 
as  the  Economist  remarks,  the  following  eloquent  figures  are 
not  likely  to  be  losi,  sight  of  by  those  who  are  agitating  for 
the  abolition  of  "profiteering" :  ^ 

Gross        Expenses  Net        Deprecia- 

Year  Ended  March  Profits  etc.  Profits  tion     Dividends 

£                 £  £                  £  % 

1913 315.606  111,967  203,639         41.095           6 

1914 314.949  131.461  183,488         23,202           6 

1915 272,182  149,509  122,673  '262,274  nil 

1916 295,089  125,645  169,444         45.104  nil 

1917 442,776  140,189  302,587         44.057           7i 

*  Including  £220,889  drawn  from  "premium  on  shares  account." 
^  The  Economist,  June  2,  1917,  p.  1026. 


CHAPTER  V 

« 

The  Condition  of  Workmen 

When  the  war  broke  out  many  mills  and  factories,  antici- 
pating a  reduced  demand,  curtailed  their  activities,  and  in 
consequence  of  this  large  numbers  of  wage  earners  were 
thrown  out  of  employment.^  Many  merchants  also  reduced 
their  staffs  and  cut  the  wages  of  their  employes.^  There  was 
a  general  fear  that  business  would  greatly  diminish  and  that 
widespread  destitution  would  result.  To  meet  the  emergency, 
the  Prince  of  Wales  Fund  was  established  and  several  million 
pounds  were  collected  for  the  purpose  of  relieving  the  antic- 
ipated distress. 

However,  those  who  predicted  the  ruin  of  industrial  and 
commercial  enterprises,  with  all  the  misery  that  such  a  break- 
down would  entail,  proved  false  prophets.  The  revival  of 
business  came  almost  on  the  very  heels  of  the  shock  which  the 
declaration  of  war  produced. 

The  rate  of  unemployment  in  the  registered  trades  of  Eng- 
land and  Wales  rose  in  August,  1914,  to  7  per  cent,  or  to  nearly 
treble  of  what  it  was  during  the  month  of  July,  but  by  the 
end  of  November  it  fell  back  to  the  July  rate  and  since  that 
time  the  percentage  of  unemployment  among  English  trade 
unionists  has  been  steadily  declining;  during  the  latter  part 
of  191 5  the  ratio  was  0.6  per  cent  and  at  the  end  of  191 6  it 
was  again  only  half  of  that  recorded  for  December,  1915.^ 
This  low  level  was  maintained  through  the  first  half  of  1917;  a 
slight  reaction  set  in  in  September,  when  the  percentage  of 
unemployment  rose  to  1.3;^  this  was  almost  entirely  due  to 
the  orders  restricting  the  consumption  of  cotton.  In  record- 
ing this  increase,  the  Labour  Gazette  adds  that  nearly  all  prin- 

1  The  Round  Table,  vol.  vi,  p.  73. 

2  The  Nation's  Business,  November,  19 17,  p.  30. 
^Labour  Gazette  (British),  January,  1917,  p.  4. 

*  The  Economist,  November  24,  1917,  p.  387. 

78 


GREAT    BRITAIN  79 

cipal  industries  were  fully  employed  and  that  in  many  cases 
there  was  much  overtime  work.  One  may  also  add  that  pay- 
ments were  provided  to  textile  operatives  who  became  idle  as 
a  result  of  the  restrictions  of  the  Cotton  Control  Board,  adult 
men  being  given  25s.  per  week,  adult  women  15s.  and  young 
people  from  3s.  to  12s.,  dependent  on  the  character  of  the 
work  previously  done  and  whether  they  were  employed  full 
time  or  were  half  timers.^  The  unemployment  in  the  cotton 
industry  is  in  the  nature  of  organized  short  time — the  opera- 
tives affected  not  being  discharged,  but  merely  suspended  in 
rotation  for  one  week  out  of  four  or  more  according  to  circum- 
stances.^  At  the  end  of  January,  1918,  the  unemployment 
was  i.o  per  cent,  and  at  the  end  of  February  0.9  per  cent. 

The  following  table  shows  the  mean  annual  percentages  of 
unemployment  among  trade  unionists  reporting  to  the  depart- 
ment in  each  of  the  years  1 902-1 91 7: 

1902—4.0  1906—3.6  1910— 4.7  1914— 3.3 

1903—4.7  1907—3-7  1911— 3.0  1915— I.I 

1904 — 6.0  1908 — 7.8  1912 — 2.4  1916 — 0.4 

1905— 50  1909—7-7  1913— 2.1  1917— 0.7 

These  figures  are  confirmed  by  the  statistics  of  unemploy- 
ment obtained  in  connection  with  National  Unemployment 
Insurance  in  certain  trades,  according  to  which  the  monthly 
percentage  unemployed  in  1917  was  0.6,  compared  with  0.6 
in  1916,  1.2  in  1915,  4.2  in  1914  and  3.6  in  1913.^ 

Another  gratifying  feature  in  the  industrial  situation  has 
been  the  decline  of  pauperism.  Just  as  in  the  rate  of  unem- 
ployment, an  increase  manifested  itself  at  the  outset  of  the 
war,  the  rise  reaching  its  maximum  on  August  22,  1914,  when 
the  figures  recorded  for  England  and  Wales  were  600,737,  ^s 
compared  with  559,476,  the  corresponding  date  in  1913.'* 
After  that  date  pauperism  fell  off  steadily  toward  its  normal 
level  and  by  January,  191 5,  the  figures  showed  a  substantial 
decrease,  this  decrease,  apart  from  the  usual  seasonal  fluctua- 

^  Labour  Gazette,  October,  1917,  p.  355. 

"^  Ibid.,  March,  1918,  p.  91. 

'Ibid.,  January,  1918,  p.  3. 

*  Ibid.,  November,  1916,  p.  404. 


80  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

tions,  being  since  maintained.  This  has  been  due  to  great 
demand  for  man-power  because  of  the  war. 

The  following  table  shows  for  England  and  Wales  the  total 
number  of  paupers  in  receipt  of  poor  relief  at  the  end  of  March 
in  each  of  the  years  1914,  1915  and  1916: 

1914  1915  1916 

Casual  paupers 8,609  5-279  4.056 

Paupers  in  receipt  of  outdoor  medical  relief  only  19,868  18,970  15-997 

Lunatics  in  lunatic  asylums 100,941  102,975  100,182 

Other  classes  of  paupers 643,643  627,900  561,048 

In  December,  1917,  compared  with  December,  1916,  the  total 
number  of  paupers  decreased  by  24,922.1 

The  absence  of  distress  since  the  war  has  also  been  shown 
in  other  ways.  In  the  early  days  of  the  war  a  government 
Committee  on  the  Prevention  and  Relief  of  Distress  was 
appointed,  the  country  was  organized  under  local  representa- 
tive committees  and,  as  previously  stated,  a  National  Relief 
Fund  (the  Prince  of  Wales  Fund)  was  opened.  "The  experi- 
ence of  these  committees  showed  .  .  .  that,  after  indus- 
try had  readjusted  itself,  assistance  was  required  only  in 
isolated  cases;  at  the  end  of  191 6  it  was  practically  confined  to 
watering  places  on  the  east  coast,  where  lodging  house  keepers 
have  suffered  exceptionally  in  consequence  of  the  war."^ 

The  records  of  the  distress  committees,  formed  under  the 
Unemployed  Workmen  Act,  1905,  give  similar  results.  In 
December,  19 14,  the  number  of  persons  receiving  relief  from 
such  committees  amounted  to  6,055,  or  nearly  double  the 
number  in  December,  1913.  In  December,  1915,  the  number 
of  persons  receiving  such  relief  had  fallen  to  the  insignificant 
total  of  74;  a  small  increase  (to  289)  was  recorded  for  Decem- 
ber, 1916.^ 

Concurrently  with  the  decline  in  the  number  of  unemployed 
and  of  paupers,  there  has  been  an  increase  in  the  number  of 
women  engaged  in  gainful  occupations.  According  to  the 
findings  of  the  British  Association  for  the  Advancement  of 

'  Labour  Gazette,  January,  1918,  p.  24. 
^  Ibid.,  November,  1916,  p.  405. 
^  Ibid.,  January,  1917,  p.  25. 


.   GREAT    BRITAIN  8 1 

Science,  which  investigated  the  effect  of  the  war  on  the  indus- 
trial conditions  of  Great  Britain,  the  number  of  occupied 
women  in  the  United  Kingdom  in  July,  1914,  was  5,020,000. 
In  mid-April,  1916,  the  number  had  risen  to  5,490,000,  an 
increase  of  470,000  in  21  months  of  war.  This  is  about  live 
times  the  normal  peace  time  increase,  which  for  such  a  period 
would  have  been  only  about  94,830.^ 

As  the  committee's  report  points  out,  this  accelerated  rate 
of  increase  is  not  due  entirely  to  the  recruiting  of  additional 
women  into  industry — i.e.,  of  women  entering  industry  for  the 
first  time.  Probably  fewer  women  have  married  and  fewer 
have  retired  from  industry  on  marriage.  The  Labour  Gazette, 
which  in  its  statistical  tables  does  not  take  cognizance  of 
women  occupied  in  domestic  service  or  in  very  small  work- 
shops (such  as  exist,  for  instance,  in  the  dressmaking  trade), 
gave  the  number  of  females  occupied  in  July,  1914,  as  3,272,- 
000;  by  January,  1917,  this  number  rose  to  4,344,000,  an 
increase  of  1,072,000,  all  of  which  but  1,000  represented  direct 
replacement  of  men  by  women. ^  In  October,  191 7,  the 
number  of  men  replaced  by  women  was  1,392,000.^  The  fig- 
ures are  based  on  returns  made  by  employers  to  the  Industrial 
(War  Inquiries)  Branch  of  the  Board  of  Trade. 

The  unprecedented  demand  for  labor,  coupled  with  rising 
prices,  led  to  a  marked  increase  in  wages,  much  of  this  increase 
being  given  as  war  bonuses  or  special  advances  in  rates  limited 
to  the  period  of  the  war.  Up  to  the  end  of  December,  1916, 
nearly  six  million  work  people  received  some  advance.  On 
an  average,  the  weekly  increase  was  about  6s.  per  head;  in 
some  industries  directly  concerned  with  the  supply  of  war 
requirements  it  ranged  from  los.  to  12s.  The  increase  in 
weekly  wages  for  1915  was  £677,700,  for  1916  £595,000,  for 
1917  £2,183,000.^ 

1  Labor,  Finance  and  the  War,  edited  by  A.  W.  Kirkaldy,  quoted  from  Monthly 
Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  1917,  p.  335. 

"^Labour  Gazette,  April,  1917,  p.  125. 

'  The  Economist,  November  24,  1917,  p.  837. 

*  Labour  Gazette,  January,  1917,  p.  3;  see  also  The  Economist,  February  16,  1918, 
p.  264. 


82        PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

The  Board  of  Trade  discontinued  in  1914  the  publication 
of  index  numbers  of  money  wages.  Taking  1900=100  as  a 
base,  the  figures  for  1913  were  106.5,  Professor  Nicholson's 
estimates  are  107  for  1914,  117  for  1915  and  137  for  1916. 
Mr.  Kitchin's  index  number  for  1916  is  only  126.^ 

It  is  obvious  that  the  increase  in  the  rates  of  wages  was 
much  below  the  increases  recorded  in  the  price  of  food  and 
other  necessaries,  but  the  figures  take  no  account  either  of 
the  increased  income  of  the  family  or  of  the  rise  in  earnings 
due  to  greater  regularity  of  employment,  overtime  and  night 
work,  transfers  of  individuals  to  higher  paid  places,  speeding 
up  of  piece  work,  etc.^  It  is  to  be  regretted  that  no  statistics 
are  available  which  would  show  the  extent  to  which  the  total 
earnings,  as  distinct  from  rates  of  wages,  have  increased  since 
the  beginning  of  the  war. 

In  a  letter  to  the  Economist  for  September  22,  191 7,  Mr. 
W.  R.  Lawson  surmises  that  "  the  national  wages  bill  has  been 
more  than  doubled,  probably  more  than  trebled."  He  con- 
siders that  the  fabulous  profits  that  are  said  to  have  been 
made  were  only  a  sequel  to  the  fabulous  wages  and  he  holds 
both  responsible  for  the  rise  of  commodity  prices.  The  rise 
of  wages  and  profits  led  to  an  increased  demand  for  goods  and 
intense  competition  among  buyers  forced  the  prices  up. 

Writing  at  a  much  earlier  date,  Mr.  C.  H.  d'E.  Leppington 
objected  as  far  as  Great  Britain  was  concerned  to  a  statement 
contained  in  the  U.  S.  Bureau  of  Labor  bulletin  on  food  prices 
during  the  war,  that  "the  hardship  caused  by  the  increased 
cost  of  living  has  in  many  cases  been  aggravated  by  a  decrease 
of  purchasing  power  among  the  working  classes."  According 
to  Mr.  d'E.  Leppington, 3  it  can  not  be  held  to  apply  to  Great 
Britain,  in  view  of  the  enormous  wages  now  earned. 

The  report  on  national  insurance  covering  the  administra- 
tion of  the  law  during  the  last  three  years  bears  witness  to  the 

'J.  S.  Nicholson:  "Statistical  Aspects  of  Inflation,"  Journal  of  the  Royal  Statistical 
Society,  July,  191 7,  p.  489. 

^  Interim  report  of  the  committee  appointed  by  the  Board  of  Trade  to  investi- 
gate the  principal  causes  which  led  to  the  increase  of  prices  of  commodities,  p.  5. 

^  The  Economic  Journal,  March,  191 6. 


GREAT    BRITAIN  83 

fact  that  the  average  physical  condition  of  men,  women  and 
children  has  vastly  improved.  The  report  sets  forth  that 
from  the  beginning  of  the  war  sickness  among  both  men  and 
women  has  rapidly  and  steadily  decreased.  This  is  particu- 
larly true  of  women.  In  19 14  the  average  cost  for  all  women 
getting  the  benefits  of  the  insurance  fund  was  five  cents  a 
week.  In  1915  it  fell  to  three  cents,  in  191 6  to  two  cents;  the 
figures  for  191 7  have  not  been  made  up,  but  another  important 
decrease  was  expected.^ 

The  insurance  commissioners  attribute  this  result  to  indus- 
trial conditions  under  which  due  attention  is  paid  to  the  wel- 
fare of  the  worker  and  wages  are  high  enough  to  insure  a 
sufficiency  of  good  food.  Before  the  war  millions  of  people 
lived  on  starvation  wages  in  misery  and  squalor  and  the  nation 
was  confronted  with  a  progressive  physical  deterioration 
among  the  mass  of  people. ^ 

Another  indication  of  increased  purchasing  power  of  the 
population  and  of  the  volume  and  variety  of  employment 
which  the  war  provided  may  be  seen  in  the  statistics  of  busi- 
ness failures.  These  declined  from  7,191  in  1913  to  5,510  in 
1914,  to  4,864  in  1915,  to  3,210  in  1916  and  to  2,255  in  1917. 
To  some  extent,  the  decline  has  been  due  to  special  protective 
legislation  which  has  been  brought  into  operation  since  the 
outbreak  of  war,  but  a  more  important  factor  still  has  been 
the  general,  though  of  course  highly  artificial,  prosperity 
resulting  from  the  active  manufacture  of  war  materials  at  a 
steadily  rising  level  of  prices.^  Kemp's  Mercantile  Gazette 
comments  on  these  figures  of  failures:  "The  millions  paid 
away  weekly  in  wages  and  salaries  are  being  freely  spent  by 
all  these  classes  who  are  now  more  prosperous  than  they  have 
been  before.  So  the  shops  and  the  dealers  are  doing  well, 
and,  therefore,  the  wholesale  and  manufacturing  firms  are 
making  much  money,  and  making  it  quickly."'* 

It  is  immaterial  for  the  purpose  in  view  to  settle  here  the 

'  Literary  Digest,  March  23,  1918,  p.  84. 
"^  Ibid.,  March  23.  1918,  p.  80. 
^Bankers'  Magazine,  February,  1918,  p.  177. 
*  Ibid.,  February,  1918,  p.  179. 


84  PRICES    AND    PRICE    CONTROL   DURING   THE   WAR 

question  as  to  whether  this  revival  of  industrial  and  com- 
mercial activity  was  a  sign  of  healthy  development  or  merely 
the  result  of  a  feverish  demand  on  the  part  of  the  government 
for  services  and  for  commodities  necessary  to  prosecute  the 
war.  What  is  of  importance  is  that,  to  use  Professor  Can- 
nan's  description  of  labor  conditions,  "the  unemployment 
percentage  curve  sank  almost  to  the  case  of  the  chart;  old  age 
pensioners  were  dragged  from  their  retirement;  thousands  of 
"fiappers,"  girls  in  their  early  teens,  left  their  trivial  home 
tasks  and  peopled  shanties  run  up  for  government  depart- 
ments in  St.  James's  Park  and  the  Embankment  Gardens,  and 
hundreds  of  thousands  worked  in  munition  factories  every- 
where, while  their  brothers,  the  "flippers,"  got  promotion  at  a 
rate  which  suggested  that  Father  Time  must  have  taken  to  an 
aeroplane.  Wages  in  the  new  occupations  were  very  high, 
and  even  in  the  depressed  trades  "war  bonuses"  had  to  be 
given  to  retain  a  much  diminished  number  of  workers.  So 
far  as  money  receipts  were  concerned,  the  working  classes 
never  had  such  a  glorious  time."^ 

According  to  Mr.  Paish,  "the  additional  earnings  of  the 
working  classes  arising  from  the  shifting  of  labor  to  more 
highly  paid  industries,  full  employment  with  much  overtime, 
advances  in  the  rates  of  wages  and  allowances  to  the  families 
of  soldiers  and  sailors,  completely  neutralized  the  advance  in 
the  cost  of  living  and  caused  the  consumption  of  the  working 
classes  to  show  marked  increase."^ 

The  Spectator  goes  so  far  as  to  state  that  "wages  had  gone 
up  in  the  majority  of  cases  far  more  than  prices  had  risen. 
In  many  instances  wages  have  risen  three  or  four  hundred  per 
cent  since  the  war  began,  in  some  instances  even  more;  while 
prices  have  only  risen,  at  most,  a  hundred  per  cent. 
Introduction  of  female  labor  into  workshops,  together  with 
the  extended  use  of  unskilled  labor  on  nominally  skilled  work, 
increased  the  family  incomes  enormously." 

'  E.  Cannan:  "Industrial  Unrest,"  The  Economic  Journal,  December,  1917,  p. 

455- 

^George  Paish:  "War  Finance,"  Journal  of  the  Royal  Statistical  Society,  May, 
1916,  p.  276. 


GREAT   BRITAIN  85 

Another  evidence  that  the  wage  earning  classes  on  the  whole 
were  not  lacking  the  necessaries  of  existence  was  to  be  found 
in  their  unusual  expenditure  on  the  amenities  and  adornments 
of  life.^  The  reports  of  the  retail  stores,  both  in  London  and 
in  provincial  towns  show  a  record  of  high  profits,  their  business 
in  many  instances  having  been  limited  only  by  the  depletion 
of  staffs  and  the  inability  of  replenishing  them  fast  enough  to 
meet  the  demand.  Undoubtedly,  many  buyers  in  these 
stores  were  not  industrial  laborers,  and,  when  the  Economist 
states^  that  from  the  nature  of  the  goods  sold  it  is  obvious  that 
the  appeal  for  war  economy  has  been  woefully  neglected  by 
the  London  shopper,^  or  that  shops  and  stores  have  been  vying 
with  breweries,  hotels  and  restaurants  in  the  prosperity  which 
they  enjoy, ^  the  periodical  reproaches  not  only  the  wage  earn- 
ing class  for  their  thoughtless  expenditures  but  the  mass  of  the 
people  who  have  not  been  willing  to  forego  the  demand  for 
goods  and  services  which  the  financial  and  industrial  task 
imposed  upon  Great  Britain  urgently  required.^ 

Mr.  Selfridge,  the  net  profits  of  whose  department  store  in 
London  rose  from  £112,396  in  1913  to  £240,832  in  191 7, 
attributes  the  large  increase  in  his  turnover  to  the  fact  that 
he  caught  the  spirit  of  the  changing  demand  and  provided 
facilities  for  supplying  it.  According  to  him,  there  has  been 
an  increase  of  purchases  by  munition  workers  and  other  wage 
earners  whose  incomes  have  risen ;  they  buy  household  neces- 
sities and  comforts  as  well  as  articles  of  wardrobe  and  cheap 
jewelry;  few  fancy  stocks  such  as  party  dresses,  expensive 
gloves,  etc.,  are  sold.^  The  experience  of  other  stores  does  not 
corroborate  Mr.  Selfridge's  contentions  as  to  the  decline  in 
the  sales  of  the  latter  goods.  Thus  the  profits  of  Mappin  and 
Webb — a  largely  luxury  business — have  been  showing  a 
steady  recovery  since  their  decline  in  1914;  they  rose  from 

'  H.  S.:  "Early  Phases  of  Food  Control,"  The  Edinburgh  Review,  January,  1918, 
p.  116. 

■  Supra,  p.  75. 

'  The  Economist,  June  9,  1917,  p.  1064. 

*  Ibid.,  April  13,  1918,  p.  596. 

'  Ibid.,  February  17,  1917,  p.  290. 

^  Ibid.,  June  9,  1917,  p.  1064;  also  The  Nation's  Business,  November,  1917, 
p.  30. 


86  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

£25,638  in  that  year  to  £46,780  in  1917,  and  Jay's,  the 
fashionable  ladies'  paradise,  though  not  as  prosperous  as  in  the 
prewar  times,  seems  to  be  able  to  maintain  itself  with  a  profit 
which  climbed  up  from  £12,222  in  1915  to  £15,197  in  1916 
and  £15,917  in  1917,  as  compared  with  £40,857  in  1913.'^  Nor 
are  the  purchases  of  luxuries  confined  to  the  people  in  and 
around  London.  The  Wales  commissioners  appointed  to 
inquire  into  the  causes  of  industrial  unrest  reported  that 
the  workers  resented  the  ostentatious  parade  of  wealth  and 
fashion  in  the  streets  of  Cardiff,  Newport  and  Swansea.'^ 
The  Scotch  commissioners  found  that  on  the  whole  among 
industrial  workers  there  was  no  serious  difficulty  in  meeting 
the  cost  of  living,  at  least  among  the  workers  engaged  in  the 
largest  industries  in  Scotland.  The  experience  of  shopkeepers 
and  cooperative  societies,  the  reduction  of  cases  in  small  debts 
courts,  the  savings  banks  returns,  the  reports  of  Poor  Law 
authorities,  etc.,  all  seem  to  indicate  that  on  the  whole  the  ag- 
gregate weekly  incomes  of  industrial  workers  keep  pace  with 
the  cost  of  living.^ 

While  the  purchase  of  nonessentials  in  time  of  war  is  deplor- 
able, one  realizes  that  there  are  extenuating  circumstances  for 
such  expenditures,  especially  on  the  part  of  the  poorer  classes 
of  the  community.  They  have  been  denied  the  comforts  of 
every  day  existence  and  now  for  the  first  time  in  their  lives 
they  find  themselves  in  possession  of  some  extra  money. 
They  can  hardly  be  blamed  if  they  want  to  spend  it  or  if  they 
do  not  spend  it  wisely.  "Changes  in  distribution,  when  the 
general  standard  of  living  is  rising  rapidly  are  likely  to  lead  to 
extravagance,  more  especially  in  war  time,  when  all  condi- 
tions favor  waste. "^ 

The  belief  seems  to  be  general  that  the  condition  of  the 
working  class  is  one  of  widespread,  if  artificial,  prosperity, 
that,  measured  by  all  ordinary  tests,  poor  people  appear  to 

1  Supra,  p.  74. 

^  Industrial  Unrest  in  Great  Britain,  Bulletin  of  the  U.  S.  Bureau  of  Labor 
Statistics,  No.  237,  p.  180. 

'  Ibid.,  p.  206. 

*  A.  W.  Kirkaldy  (editor):  Credit,  Industry  and  the  War,  being  reports  and  other 
matter  presented  to  the  Section  of  Economic  Science  and  Statistics  of  the  British 
Association  for  the  Advancement  of  Science,  p.  10. 


GREAT    BRITAIN  87 

have  an  unusual  amount  of  money  at  their  disposal.^  What 
may  be  called  the  cheap  luxury  trades,  the  less  expensive 
jewelry,  pianos,  amusements,  etc.,  have  been  unusually  flour- 
ishing, and  the  consumption  of  tea,  tobacco,  beer  and  spirits 
has  gone  up.  The  greater  part  of  money,  however,  is  no 
doubt  being  spent  on  clothes,  food  and  other  necessaries. 

While  some  maintain  that  the  war  brought  an  evident  and 
probably  a  permanent  rise  in  the  standard  of  life  not  only  to 
trade  unionists  and  other  laborers  who  were  able  to  make 
their  voices  heard  but  also  to  the  poorly  paid  unorganized 
sections  of  the  community,  there  are  many  others  who  express 
a  different  opinion.- 

The  Board  of  Trade  Committee  on  Prices  reported  that 
"while  the  evidence  taken  goes  to  show  that  there  is  less  total 
distress  in  the  country  than  in  an  ordinary  year  of  peace,  as 
shown  by  increase  in  the  total  demand  for  food,  .  .  .  cer- 
tain classes  normally  in  regular  employment,  whose  earnings 
have  not  risen  in  the  same  proportion  as  the  cost  of  living — 
for  example,  the  cotton  operatives  and  some  classes  of  day- 
wage  workers  and  laborers — are  hard  pressed  by  the  rise  in 
prices,  and  actually  have  to  curtail  their  consumption,  even 
though  the  pressure  of  high  prices  may  have  been  mitigated, 
in  some  cases,  by  the  employment  of  members  of  a  family  in 
munition  works  and  by  the  opening  of  better  paid  occupations 
to  women. "^ 

At  the  request  of  the  President  of  the  Board  of  Trade  a 
committee  of  the  Royal  Society  made  a  study  of  the  food 
supply  of  the  United  Kingdom,  both  before  and  after  the 
declaration  of  war.'*  In  its  report  the  committee  came  to  the 
conclusion  that  the  supply  available  up  to  July  29,  1916,  has 
provided  a  margin  of  about  five  per  cent  above  the  minimum 
necessary  for  proper  nutrition.  To  this  statement  is  added  a 
remark  that  "while  the  supply  of  food  has  been  adequate  for 
the  support  of  the  population,  the  rise  in  prices  has  accentu- 
ated the  inequalities  of  distribution,  which  reduce  the  daily 

'  "The  War  and  English  Life,"  The  Round  Table,  vol.  vi,  1915-16,  pp.  76-77 

''■  Ibid.,  p.  79. 

'  Report  (interim)  of  the  committee  on  prices,  Cd.  8358,  p.  5. 

*  Supra,  p.  55. 


88  PRICES   AND    PRICE    CONTROL   DURING    THE    WAR 

rations  of  many  below  the  level  of  efficiency.  Any  curtail- 
ment of  supply  .  .  .  would  result  in  the  poorer  classes 
obtaining  less  than  needful  for  safety — unless  distribution  is 
organized."^ 

There  was  never  so  much  money  in  circulation  in  this  coun- 
try as  at  present,  writes  Mr.  Hurd,  and  we  were  never  so  poor; 
the  queues  of  women  and  children  at  the  shop  doors,  waiting 
for  hours  in  the  cold  for  small  quantities  of  butter,  tea,  sugar 
or  other  articles,  are  a  familiar  picture  now.^  In  a  previous 
article,  Mr.  Hurd  called  attention  to  the  fact  that  the  British 
nation,  notwithstanding  the  popularity  of  the  war  with  wage 
earners,  who  are  employed  more  fully  than  ever  and  whose 
wages  are  exceptionally  high,  is  confronted  with  increased 
economic  embarrassment.  "The  country  is  becoming  poorer 
day  by  day — using  up  wealth  at  a  prodigious  rate;  on  the  other 
hand,  it,  or  rather  a  large  section  of  it,  is  enjoying  a  period  of 
apparent  prosperity  and  spending  freely  the  war  wages  and  war 
allowances,  forgetful  that  a  country  which  is  ceasing  to  produce 
wealth  to  the  normal  extent,  and  whose  expenditure  will  fall 
little  short  of  £1,600,000,000  in  the  present  financial  year 
[1916],  must  have  a  rude  awakening  unless  it  mends  its  ways."^ 

Cost  of  Living 

The  relation  between  prices  and  earnings  can  be  best  ascer- 
tained by  following  the  Board  of  Trade's  method  of  taking  the 
standard  working  class  budget  as  it  has  been  established  by 
their  inquiry  in  the  summer  of  1904.  This  is  based  on  1,944 
family  budgets.  The  average  weekly  income  of  the  families 
included  in  the  investigation  was  36s.  lod.  per  week  and  their 
total  expenditure  on  food  was  22s.  6d.,''  being  61  per  cent  of 
the  family  income. 

1  The  Food  Supply  of  the  United  Kinsdom.  A  report  drawn  up  by  a  committee 
of  the  Royal  Society  at  the  request  of  the  President  of  the  Board  of  Trade,  Cd. 
8421,  London,  1917. 

2  A.  Hurd:  "Wages,  Prices  and  Supplies"— A  Vicious  Circle,  The  Fortnightly 
Review,  January,  1918,  p.  38. 

3  A.  Hurd:  "British  Commerce  in  War-time:  The  Abuse  of  Sea-Power,"  The 
Fortnightly  Review,  January,  1916. 

*  The  Cost  of  Living  in  igi2,  Cd.  6953  of  1913,  pp.  299-300,  quoted  from  A.  L. 
Bowley:  Prices  and  Earnings  in  Time  of  War,  p.  16,  and  the  Report  of  the  Six- 
teenth Annual  Conference  of  the  Labor  Party,  p.  159. 


GREAT    BRITAIN 


89 


This  expenditure  on  food  at 

1904  was  distributed  thus:^ 

s.     d. 

Bread  and  flour 3 

Meat  (bought  by  weight)  ....  4 

Other  meat  (including  fish) ...  o 

Bacon o 

Eggs.  . I 

Fresh  milk i 

Cheese o 

Butter 2 

Potatoes o 

Vegetables  and  fruit o 

Total 


the  prices  of  the  summer  of 


5h 
III 

o 

II 
II 


Currants  and  raisins o 

Rice,  tapioca  and  oatmeal ...  0 

Tea I 

Cofifee  and  cocoa o 

Sugar 0 

Pickles  and  condiments o 

Jam,  marmalade,  treacle  and 

syrup o 

Other  items i 

22s.  6d. 


2| 


I* 

3f 
Hi 

3i 


U2 

9i 


The  Board  of  Trade's  weighted  index  number  for  retail 
prices  represents  the  changes  in  the  cost  of  different  foods  in. 
this  budget. 

From  the  Labour  Gazette  figures  it  appears  that  the  same 
quantities  of  food  have  cost  about  25s.  in  July,  1914.  Taking 
25s,  then  as  the  basis,  we  arrive  at  the  following  results: 

RISE  IN  COST  OF  LIVING  AND  THE  REDUCED  PURCHASING 

POWER  OF   THE   SOVEREIGN    SPENT   ON    FOOD    IN   THE 

UNITED   KINGDOM    DURING  THE  WAR^ 

(Illustrated  from  the  Changes  in  Cost  of  the  Board  of  Trade  Standard  Working 

Class  Food  Budget) 

Cost  of  One  Percentage 

Week's  Food  Increase  above 

for  Family  July,  1914 

22           6  — 


16 
II 
II 
13 
13 
17 

19 
26 

35 
37 
46 

48 

51 
62 
68 
87 

91 
93 

1  Report  of  the  Sixteenth  Annual  Conference  of  the  Labor  Party,  p.  159. 
^  Ibid.,  p.  160. 


I914 

July,. 

25 

0 

Aug. 

8.. 

29 

0 

29.. 

27 

9 

Sept. 

12.  . 

27 

9 

I< 

30.. 

28 

3 

Oct. 

.30.. 

28 

3 

Dec. 

I  . 

29 

3 

I915 

Jan. 

29 

9 

March 

31 

6 

June 

33 

9 

Sept. 

34 

3 

Dec. 

36 

6 

I916 

Jan. 

37 

0 

March 

37 

9 

June 

40 

6 

Sept. 

42 

0 

Dec. 

46 

9 

I917 

Jan. 

47 

9 

Feb. 

48 

3 

Purchasing  Power 

of  a  Sovereign 

Spent  on 

Food 

20 

0 

17 

3 

18 

0 

18 

0 

17 

8 

17 

8 

17 

0 

16 

10 

15 

10 

14 

10 

14 

7 

13 

8 

13 

6 

13 

3 

12 

4 

II 

II 

10 

8 

10 

5 

10 

4 

90  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

The  figures  on  page  89  relate  to  large  towns;  for  small  towns 
the  rise  is  two  per  cent  less  throughout.  There  is  no  infor- 
mation as  to  the  country.  These  figures  take  no  account  of 
alterations  in  dietary. 

When  allowance  is  made  for  such  changes  in  dietary  as  are 
estimated  by  the  Ministry  of  Food  to  have  taken  place,  the 
increase  in  the  average  expenditure  of  a  working  man's  family 
is  considerably  less  than  the  rise  in  prices  would  indicate. 
This  is  brought  out  in  the  following  table,  which  compares  the 
general  percentage  increases  in  (i)  prices  and  (2)  expenditure. 
The  price  percentages  (i)  are  based  on  the  same  quantities 
on  March  i,  1918,  as  in  July,  1914,  a  basis  which  affords  a 
measure  of  the  increased  cost  of  maintaining  a  prewar  stand- 
ard of  living,  so  far  as  the  articles  included  in  the  Board  of 
Trade  statistics  are  concerned;  and  the  expenditure  percent- 
ages (2)  are  based  on  the  actual  consumption  of  the  same  arti- 
cles, so  far  as  ascertained,  at  the  beginning  of  1918  in  compari- 
son with  prewar  consumption.  Certain  items  found  in  the 
w^orking  class  food  budget,  such  as  vegetables,  fruit,  currants, 
raisins,  rice,  tapioca,  coffee,  pickles,  condiments,  jam,  mar- 
malade, are  not  included  in  the  comparative  statistics.^ 

Average  Percentage 
Increase  since  July,  1914 

Small 
Large  Towns  United 

Towns  and  Kingdom 

Villages 
(i)  Level  of  retail  prices  of  articles  of  food, 
assuming  same  quantities  at   both 

dates 112  102  107 

(2)  Expenditure    on    food    allowing    for 

changes  in  consumption 48  42  45 

Some  of  the  changes  in  the  dietary  considered  by  the  Labour 
Gazette  are  the  omission  of  eggs,  the  substitution  of  margarin 
for  butter,  the  reduction  in  the  consumption  of  sugar  and  fish 
to  one-half  of  that  prevailing  before  the  war.  With  such 
changes,  the  general  percentage  increase  from  July,  1914,  to 
December  i,  1917,  would  have  been  59  instead  of  105. ^ 

^  Labour  Gazette,  March,  191 8,  p.  97. 
^  Ibid.,  December,  1917,  p.  442. 


GREAT    BRITAIN  9I 

With  reference  to  other  items  of  expenditure,  there  have 
been  substantial  increases,  except  with  regard  to  rents,  which 
remained  practically  unaltered.  The  average  increase  from 
July,  1914,  to  March  i,  1918,  in  the  prices  of  all  the  items 
ordinarily  entering  into  the  working  class  family  budget, 
including  food,  rent,  clothing,  fuel  and  light,  etc.,  may  be 
estimated  at  85,  taking  for  the  purpose  of  this  calculation  the 
same  quantities  of  the  various  items  in  March,  1918,  as  in 
1914;  if  increases  due  to  taxation  are  included,  the  increase 
between  the  two  dates  was  90  per  cent.  According  to  the 
Labour  Gazette,  it  is  not  possible  to  supplement  this  comparison 
of  the  level  of  retail  prices  generally  by  a  comparison  of  ex- 
penditure similar  to  that  given  with  regard  to  food.  Combi- 
nation of  the  average  increase  in  expenditure  on  the  specified 
principal  articles  of  food  and  on  other  items  yielded  in  March, 
1918,  a  resultant  increase  of  between  50  and  55  per  cent. 
This  statement  is  followed  by  a  suggestive  remark  that  it  is  a 
matter  of  general  knowledge  that  there  have  been  considerable 
reductions  in  the  quantities  purchased  of  some  commodities 
other  than  foodstuffs,  and  that  the  indicated  increase  of  be- 
tween 50  and  55  per  cent  in  expenditure  is  therefore  somewhat 
in  excess  of  the  average  increase  in  family  expenditure  since 
the  beginning  of  the  war.'  If  one  could  obtain  exact  figures 
showing  the  amounts  of  various  commodities  and  services 
purchased,  and  if  one  could  ascertain  what  have  been  the 
laborers'  investments  in  governmental  and  other  securities 
and  their  deposits  in  savings  banks,  then  one  could  speak  with 
a  greater  degree  of  certainty  and  accuracy  as  to  what  have 
been  the  actual  effects  of  the  war  upon  the  British  laboring 
class. 

1  Labour  Gazette,  March,  1918,  p.  97. 


CHAPTER   VI 

Rise  in  Prices  and  Industrial  Unrest 

There  was  much  industrial  unrest  in  the  years  just  preced- 
ing the  war;  strikes  were  frequent,  and  the  expenditures  of 
the  chief  British  unions  on  industrial  disputes  increased  from 
an  average  of  £150,000  a  year  for  the  years  1 904-1 907  to  a 
sum  of  £1,350,000  for  1913  alone. ^  A  truce  between  capital- 
ists and  laborers  followed  the  declaration  of  war.  On  August 
24,  1 9 14,  a  special  conference  called  by  the  joint  board  of  the 
Trades  Union  Congress,  the  General  Federation  of  Trade 
Unions,  and  the  Labor  party  passed  the  following  resolution: 

That  an  immediate  eflfort  be  made  to  terminate  all  existing  trade  disputes, 
whether  strikes  or  lockouts,  and  whenever  new  points  of  difficulty  arise  during 
the  war  period  a  serious  attempt  should  be  made  by  all  concerned  to  reach  an 
amicable  settlement  before  resorting  to  a  strike  or  lockout. 

The  number  of  new  disputes  fell  from  99  in  July,  1914,  to 
14  in  August.  The  general  effect  of  the  truce  can  be  seen 
from  the  fact  that  during  the  first  seven  months  of  1914 
there  were  836  disputes,  involving  423,000  workers;  while 
during  the  last  five  months  there  were  only  137,  involving 
23,000.  By  December  there  were  only  17  disputes  as  con- 
trasted with  56  in  December,  1913.^ 

However,  this  peace  was  but  of  short  duration.  Notwith- 
standing great  dangers  from  outside,  old  quarrels  were  soon 
brought  once  more  to  the  surface;  to  the  former  grievances 
were  added  some  new  ones,  the  most  important  of  which  was 
the  increase  in  the  cost  of  living,  the  main  cause  of  which  was, 
in  the  minds  of  workmen,  "profiteering."  According  to  the 
Labour  Year  Book,  although 

there  never  was  any  express  agreement,  .  .  .  there  certainly  was  the  tacit 
understanding  that  the  maintenance  of  the  truce  depended  on  equal  sacrifices  on 
both  sides.     But,  with  the  piling  up  of  profits  and  the  rise  in  food  prices,  there 

1  The  Round  Table,  December,  1916,  p.  67. 
*  Labour  Year  Book,  1916,  p.  22. 

92 


GREAT    BRITAIN  93 

came  among  the  workers  a  growing  irritation,  increasing  in  force,  until,  with  the 
occurrence  of  specific  grievances,  the  industrial  truce  came  to  an  end, 
the  fact  that  employers  showed  little  willingness  to  cease  from  "profiteering  as 
usual"  made  it  a  one-sided  bargain."^ 

During  the  month  of  February,  191 5,  there  occurred  no 
fewer  than  forty-seven  disputes  between  employers  and  work- 
men, with  26,129  work  people  involved  directly  and  2,878 
indirectly.2 

This  unrest,  during  the  early  stages  of  the  war,  was  not  due 
so  much  to  actual  distress  among  wage  earners  as  to  the  desire 
on  their  part  to  participate  more  fully  in  the  fictitious  pros- 
perity which  war  activities  have  created.  There  were  some 
groups  of  laborers  whose  family  earnings  had  not  risen  sufifi- 
ciently  to  meet  the  added  expense  of  living,  but  these  were 
not  to  be  found  among  the  trade  unionists,  who  were  the  loud- 
est in  their  protestations  and  recriminations.  The  unrest 
may  also  be  attributed  to  an  innate  belief,  which  British 
workmen  possess  in  common  with  most  human  beings,  that 
food,  being  an  obvious  absolute  necessity  for  existence,  should 
be  within  reach  of  everybody,  obtainable  on  terms  easy  to 
meet.  Any  enhancement  in  the  price  of  such  commodities 
as  bread  or  milk  is  immediately  resented  as  an  injustice,  a 
taking  of  unfair  advantage  which  should  be  set  right  by 
public  authority.^ 

The  irritation  of  workmen  was  increased  by  evidences  of 
unusual  prosperity  of  those  classes  to  whom  increased  prices 
brought  large  business  profits.  The  ostentatious  display  of 
wealth  on  the  part  of  these  classes  has  been  a  continuous 
source  of  irritation  throughout  the  period  of  the  war  and  is 
still  existent.  As  late  as  last  winter  we  find  the  periodical 
press  of  England  decrying  the  extravagance  of  women  in  the 
matter  of  dress.  Furs  have  never  been  more  magnificent 
than  now  or  materials  more  exquisite  in  texture  and  ruinous 
in    cost.*     "The   worst   of    this   extravagance,"    writes    the 

'  Labour  Year  Book,  1916,  p.  22. 

2  J.  H.  Jones:  "Labour  Unrest  and  the  War,"  The  Political  Quarterly,  May, 
1915,  p.  86.  ,  .  .    ^  ^ 

*  A.   R.   Marsh:  "Government  Expedients  for  Controlling  the  High   Cost  of 
Food,"  The  Economic  World,  New  York,  December  9,  1916,  p.  747. 

*  Letter  to  The  Times,  November  17,  1917. 


94  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

Economist,^  "is  that  it  is  flaunted  in  the  streets."  And  there 
is  no  reason  to  suggest  that  this  feminine  extravagance  is 
greater  than  the  even  more  inexcusable  wastefulness  on  the 
part  of  the  men.  The  paper  calls  attention  to  an  article  in 
the  Herald,  "How  They  Starve  at  the  Ritz,"  which  is  worth 
study  as  showing  how  keenly  organs  of  working  class  opinion 
appreciate  the  manner  in  which  the  well-to-do  classes  are 
meeting  war  needs  by  personal  sacrifice.  "This  thoughtless 
and  ignorant  extravagance  is  .  .  .  producing  a  very 
critical  and  dangerous  spirit  among  the  working  classes, 
.  .  .  the  belief  is  growing  that  the  capitalist  as  such  is 
growing  rich  out  of  the  war."- 

In  1915  the  British  Association  for  the  Advancement  of 
Science  appointed  a  committee  to  investigate  the  causes  of 
industrial  unrest.  This  committee  stated  in  its  report  that 
the  revival  of  strife  after  the  truce  of  early  months  of  the  war 
has  followed  upon  a  considerable  and  steady  increase  in  prices, 
especially  of  food.  One  of  the  main  causes  of  the  strife  was 
dissatisfaction  with  conditions,  which  prevented  the  workmen 
from  raising  their  standard  of  living.^  Among  other  causes  of 
unrest  enumerated  in  the  committee's  report  of  special  inter- 
est in  connection  with  a  study  of  price  movements  are:  (i) 
the  suspicion  on  the  part  of  the  workmen  that  they  are  ex- 
ploited, largely  due  to  the  lack  of  knowledge  of  economic 
conditions  in  the  industry  in  which  they  are  employed,  and 
(2)  war  measures,  especially  the  Munitions  of  War  Act,  which 
have  operated  to  curtail  the  freedom  of  action  of  both  em- 
ployers and  employed.  The  irritation  has  been  intensified  by 
the  physical  strain  involved  in  long  hours  of  work  at  high 
speed,  by  the  materially  increased  cost  of  living  and  by  ap- 
parently big  profits  made  by  many  companies,  leading  labor 
to  believe  that  the  nation  was  being  exploited  for  private  gain.^ 

^  The  Economist,  November  24,  1917,  p.  831. 

2  Ibid.,  November  24,  1917,  p.  831;  see  also  The  Economist,  September  i,  1917, 
p.  316,  and  The  Economic  World,  December  9,  1916,  p.  747. 

_  ^  Labour,  Finance,  and  the  War,  being  the  result  of  inquiries  arranged  by  Sec- 
tion of  Economic  Science  and  Statistics  by  the  British  Association  for  the  Ad- 
vancement of  Science  during  the  years  1915  and  1916,  ch.  ii,  Industrial  Unrest, 
pp.  20-57. 

*  Monthly  Review  of  Labor  Statistics,  April,  191 7,  p.  521. 


GREAT    BRITAIN  95 

The  attitude  of  labor  in  general  towards  the  governmental 
policy  of  noninterference  with  prices,  which  characterized 
Asquith's  ministry,  is  manifest  from  many  recommendations 
and  resolutions  that  have  been  passed  by  workers'  committees 
and  by  trade  union  congresses;  it  is  also  seen  in  the  motions 
presented  by  Labor  members  in  the  House  of  Commons,  as 
well  as  in  the  debates  which  took  place  there.  The  War 
Emergency  Workers'  National  Committee  had  turned  its 
attention  to  the  question  of  prices  from  the  very  first,  and  in 
its  program  one  finds  the  following  proposals: 

The  encouragement  and  development  of  home  grown  food  supplies  by  the 
National  Organization  of  Agriculture,  accompanied  by  drastic  reductions  of 
freight  charges  for  all  produce,  in  the  interests  of  the  whole  people. 

Protection  of  the  people  against  exorbitant  prices,  especially  in  regard  to  food, 
by  the  enactment  of  maxima  and  the  commandeering  of  supplies  by  the  nation 
wherever  advisable. 

Right  through  the  first  few  months  of  the  war  there  was  a 
general  feeling  that  each  month  prices  had  reached  their 
climax,  and  that  by  waiting  a  little  longer  the  workers  would 
see  prices  fall.  But  by  the  new  year  it  became  clear  to 
the  laborers  that  this  hope  was  illusory,  and  the  price  cam- 
paign was  begun  in  earnest.  The  Workers'  Committee  issued 
a  memorandum  on  January  21,  191 5,  on  the  prices  of  wheat, 
in  which  they  proved  conclusively,  according  to  the  Labour 
Year  Book,^  that  increased  freightage  rates  were  the  chief 
cause  of  high  wheat  prices.  To  corroborate  their  statements, 
they  reprinted  a  sentence  from  the  Journal  of  Commerce  for 
November  27,  1914,  which  ran  as  follows: 

The  opportunities  now  open  to  British  shipping  are  obvious.  There  are  no  more 
cut  rates  by  subsidized  German  vessels.  German  ships  being  swept  off  the  sea, 
we  have  now  no  serious  competitors  in  the  carrying  trade  of  the  world. 

In  a  further  memorandum  on  coal,  they  showed  that  coal 
owners,  and  still  more  the  retail  coal  merchants,  were  making 
profits  from  war  conditions.  They  also  called  attention  to 
high  contract  prices  ruling  in  munition  trades  and  to  the  full 
use  made  by  capitalists  in  general  of  the  law  of  supply  and 
demand. 

'  Labour  Year  Book,   1916,  p.  42. 


96        PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

On  January  28,  1915,  the  Workers'  Committee  issued  a 
list  of  recommendations,  among  which  one  finds  "that  maxi- 
mum prices  for  coal  should  be  fixed  by  the  government  .  .  . 
and  that  the  government  commandeer  coal  supplies  and  dis- 
tribute to  household  consumers  through  municipal  or  coop- 
erative agencies." 

The  Secretary  of  the  Labor  party  was  requested  to  arrange 
a  series  of  district  conferences  to  be  held  on  February  13,  1915. 

Two  days  before  the  District  conferences  were  held,  a 
debate  took  place  in  the  House  of  Commons  on  the  following 
motion,  which  had  been  tabled  by  the  Labor  party: 

That  in  the  opinion  of  this  House,  the  present  rise  in  the  prices  of  food,  coal  and 
other  necessities  of  life  is  not  justified  by  any  economic  consequence  of  the  war, 
but  is  largely  caused  by  the  holding  up  of  stocks  and  by  the  inadequate  provision 
of  transport  facilities. 

This  House  is  therefore  further  of  the  opinion  that  the  government  should 
prevent  this  unjustifiable  increase  by  employing  the  shipping  and  railway  facilities 
necessary  to  put  the  required  supplies  on  the  market,  by  fixing  maximum  prices 
and  by  acquiring  control  of  commodities  that  are  or  may  be  subject  to  artificial 
costs.i 

Replying  to  Mr.  Kerens,  who  brought  forward  the  motion, 
and  to  Mr.  Clynes,  who,  speaking  for  the  Labor  members, 
demanded  the  fixing  of  maximum  prices.  Prime  Minister 
Asquith  stated  that  there  were  many  causes  which  contrib- 
uted to  the  rise  in  the  price  of  wheat.  The  Australian  crop 
had  failed ;  the  Argentine  crop  was  late  in  coming  to  the  mar- 
ket; there  had  been  much  speculation  in  the  United  States; 
in  addition  to  this  the  closing  of  the  Dardanelles  had  seriously 
shortened  supply,  and  the  war  was  partly  responsible  for  the 
rise  in  freights. ^  With  regard  to  coal,  the  rise  of  price  must 
be  attributed  to  high  freights  and  shortage  of  labor.  In  order 
to  improve  the  situation,  the  government  proposed  to  increase 
available  shipping  by  releasing  interned  ships  and  ships  occu- 
pied by  prisoners  as  well  as  by  accelerating  procedure  in  the 
prize  courts.  The  Prime  Minister  refused  to  resort  to  what  he 
termed  "more  heroic  steps"  and  pointed  to  the  example  of 

'  Labour  Year  Book,  1916,  pp.  42-43. 

2  69  H.  C.  Debates,  756-758  (762-764),  quoted  from  The  Political  Quarterly, 
May,  1915,  pp.  157-158. 


GREAT    BRITAIN  97 

Germany,  where  the  fixing  of  maximum  prices  led  to  evasion, 
confusion  and  the  frustration  of  the  purposes  which  they  had 
in  view.^ 

This  speech  failed  to  satisfy  a  large  proportion  of  the  pub- 
lic in  and  out  of  Parliament  i^  it  aroused  particularly  a  great 
deal  of  bad  feeling  among  the  workmen.  In  direct  disagree- 
ment to  Mr.  Asquith's  statements,  the  Labor  party  moved  on 
February  17  an  amendment  in  favor  of  maximum  prices,  its 
main  contention  being  that  there  was  no  real  scarcity,  and 
that  the  rise  of  prices  was  due  to  machinations  in  the  mar- 
ket.' At  all  the  labor  conferences  which  took  place  at  the  time 
the  following  resolution  was  carried  unanimously: 

That  this  conference  expresses  its  deep  indignation  and  disappointment  at  the 
refusal  of  the  government  to  take  effective  measures  to  deal  with  the  alarming 
rises  in  the  cost  of  food  and  fuel.  It  appeals  to  the  House  of  Commons  to  force 
the  government  to  take  immediate  steps  to  relieve  the  unsupportable  burden 
which  the  cost  of  the  necessaries  of  life  is  imposing  upon  the  working  classes.* 

In  commenting  on  the  demand  for  the  fixing  of  maximum 
prices,  the  Statist  rightly  asks  whether  if  maximum  prices 
were  enforced,  they  would  not  have  restricted  the  imports  of 
food  and  made  matters  worse. ^ 

Continuing  its  attempt  to  force  the  government  to  action, 
the  Workers'  Committee  called  a  national  conference  on  food 
and  fuel  prices.  This  conference,  which  was  held  on  March 
12,  passed  resolutions  requesting  among  other  things  that  the 
government  take  an  active  part  in  controlling  wheat  and  coal 
prices.* 

During  the  subsequent  months  of  1915,  as  well  as  through 
the  early  part  of  1916,  labor  agitation  continued,  but  on  the 
whole  conditions  were  such  that  the  government  did  not  con- 
sider the  matter  very  seriously.  Trade  unions  at  each  meeting 
•expressed  dissatisfaction,  but  it  was  more  because  of  convic- 
tion that  profiteering  was  rampant  than  because  of  real  hard- 

'69  H.  C.  Debates,  756-768  (762-764),  quoted  from  The  Political  Quarterly, 
May.  1915,  pp.  157-158. 

'  The  Statist,  February  13,  1915,  p.  245. 

'  The  Political  Quarterly,  May,  1915,  p.  158. 

*  Labour  Year  Book,  1916,  p.  42. 

'  The  Statist,  February'  13,  1915,  p.  245. 

*  Labour  Year  Book,  19 16,  p.  43. 


98  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

ship  experienced  by  their  members.  Statesmen  in  general  were 
for  letting  difficulties,  if  there  were  any,  be  settled  through 
the  natural  play  of  economic  forces.  The  inactivity  was  jus- 
tified by  pointing  to  the  example  of  Germany,  where  accord- 
ing to  many  British  observers  the  fixing  of  prices  was  a  failure.' 

Towards  the  end  of  the  second  year  of  the  war  the  situation 
became  more  acute.  The  mass  of  the  consumers  began  to  feel 
the  sting  of  growing  prices,  especially  in  case  of  such  com- 
modities as  fresh  milk.  Popular  clamor  was  growing  louder 
and  louder  and  the  pressure  exercised  upon  the  government 
stronger  and  more  insistent. 

At  a  meeting  of  the  executive  committee  of  the  National 
Union  of  Railway  Employes  held  on  August  2,  191 6,  a  reso- 
lution was  passed  demanding  an  increase  in  wages,  because 
the  government  had  not  taken  effective  measures  to  regulate 
prices  of  necessities. ^  Labor  delegation  after  labor  delegation 
was  sent  to  discuss  matters  with  the  representatives  of  the 
Cabinet.  These  delegations  included  in  their  demands  such 
items  as  the  conscription  of  wealth,  the  regulation  of  prices 
and  the  establishment  of  a  normal  relation  between  prices  and 
the  purchasing  power  of  the  population  (through  increase  in 
wages,  pensions,  etc.).  Cries  of  "hands  off  from  the  people's 
food"  began  to  be  heard  at  mass  meetings  held  by  laboring 
organizations  throughout  the  country.^  At  the  Trade  Union 
Congress  of  1916,  the  Parliamentary  Committee,  which  was 
the  executive  of  the  congress,  submitted  a  resolution  requesting 
the  nationalization  of  all  vital  industries;  this  resolution  was 
carried  unanimously  almost  without  discussion.^  It  requested 
the  appointment  of  a  Minister  of  Labor  and  Industry,  among 
whose  functions  should  be  the  control  and  organization  of 
agriculture  and  food  supply.  This  control  was  to  be  exer- 
cised (a)  through  the  direction  of  use  of  all  land,  (b)  through 
the  state's  first  claim  on  the  use  of  all  British  ships,  at  rates 
which  would  yield  a  fixed  national  standard  of  profit,    (c) 

1  Mary  Stocks:  "Attempt   to   Fix   Prices   in   Germany,"   Economic   Journal,. 
vol.  XXV,  pp.  279,  etc. 

^"Concerning  High  Prices,"  Vestnik  Evropi,  December,  1916,  pp.  257-283. 
'  The  Round  Table,  December,  1916,  pp.  76-77. 


GREAT    BRITAIN  99 

through  nationally  owned  and  controlled  storehouses,  with 
reserves  of  grain,  frozen  meat,  dried  fish  and  all  kinds  of  neces- 
sary storable  food.  The  resolution  contemplated  also  complete 
national  ownership  and  production  of  all  war  material  and 
ships  of  war  as  well  as  national  ownership  and  control  of  all 
railways,  waterways  and  mines.' 

In  November,  when  food  prices  in  the  larger  centers  of 
population  had  increased  88  per  cent  above  those  prevailing 
in  July,  1 9 14,  the  executive  decided  to  convene  a  national 
conference  in  order  to  concentrate  the  opinions  of  the  whole 
movement  in  certain  definite  directions  of  state  organization. 

For  the  first  time  in  the  history  of  the  party  the  cooperative 
societies  throughout  the  country  responded  officially  at  a 
national  conference.  The  conference  was  held  on  January 
23-26,  191 7,  and  its  final  decisions  were  as  follows: 

This  conference,  representative  of  National  Labor  organized  on  both  its  wage 
earning  and  consuming  sides,  declares  that,  whilst  regretting  the  long  delay  of  the 
government  in  taking  action  to  prevent  food  prices  rising,  as  they  have  steadily 
done  during  the  past  two  years,  welcomes  the  st;eps  that  have  now  been  taken, 
but  is  of  opinion  that  they  are  inadequate,  and  that  no  policy  will  be  acceptable 
to  organized  Labor  unless  it  includes: 

(a)  The  purchase  of  all  imported  essential  foodstuffs  by  the  government; 

(b)  The  commandeering  or  controlling  of  home  products  such  as  meat,  wheat, 
oats,  barley,  potatoes  and  milk;  and  in  view  of  the  serious  privations  being  en- 
dured by  child-bearing  women  and  young  children,  and  the  consequent  destruc- 
tion of  their  health,  the  conference  calls  on  the  government  to  introduce  immedi- 
ately a  bill  making  it  compulsory  on  municipalities  to  provide  dinners  and 
milk  for  mothers  and  young  children,  half  the  cost  being  paid  from  the  national 
Exchequer; 

(c)  The  commandeering  of  ships  and  the  controlling  of  freights  and  freight 
rates; 

(d)  The  placing  on  the  retail  markets  of  all  supplies  so  obtained  and  con- 
trolled at  prices  which  will  secure  the  full  benefit  of  government  action  to  the 
consumer;  and  the  proportional  regulation,  on  a  family  basis,  of  the  sale  of  any 
foodstuffs  in  which  there  is  a  shortage  of  supplies; 

(e)  The  organization  and  supervision  of  production:  the  government  to  take 
into  their  own  hands  at  least  four  million  acres  of  land  at  present  abandoned  to 
grass  or  fallow,  including  any  suitable  land  now  kept  as  private  parks;  to  secure 
sufficient  labor  and  machinery  to  cultivate,  sow  and  gather  in  the  harvest  from 
such  land;  to  empower  all  local  authorities  to  utilize  every  acre  of  available  land 
within  their  areas  that  is  now  lying  idle  and  to  take  over  other  land  where  required 
for  spade  cultivation  for  potatoes  and  other  vegetables;  to  call  upon  them  to  make 

1  The  Round  Table,  December,  1916,  pp.  76-77. 


100  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

such  arrangements  as  they  can  for  getting  as  large  a  proportion  as  possible  under 
cultivation;  and  to  advance  capital  to  local  authorities,  also  to  cooperative 
societies,  to  enable  them  to  bring  additional  land  into  arable  cultivation; 

(f)  The  conference  further  demands  that  for  the  period  of  the  war  and  six 
months  afterwards  the  government  shall  purchase  wheat  on  sound  business  lines, 
and  insure  that  bread  and  flour  shall  be  sold  through  the  United  Kingdom  at  a 
price  not  exceeding  6d.  per  quartern  loaf;  such  loss  as  may  be  incurred  by  this 
operation  to  be  met  as  a  portion  of  the  general  cost  of  the  war. 

Further,  in  the  opinion  of  the  conference,  the  supply  of  coal  and  other  neces- 
saries of  life  should  be  dealt  with  by  the  government  on  lines  similar  to  those 
indicated  abov^e. 

Further,  the  government  should  approach  the  governments  of  the  allied 
nations  with  a  view  to  impressing  upon  them  the  necessity  of  working  on  such  lines 
that  allied  purchases  shall  be  centralized  and  competition  between  the  allies 
destroyed.' 

Through  191 5  and  191 6  the  workmen  confined  themselves 
largely  to  the  passing  of  resolutions,  to  the  criticism  of  scan- 
dals and  to  similar  acts  of  political  agitation.  What  their 
thoughts  and  feelings  were  may  be  gathered  from  the  follow- 
ing excerpt : 

With  the  closing  of  the  food  prices  campaign,  labor  found  itself  economically 
in  a  worse  position  than  at  any  time  since  1900.  The  prices  of  necessities  were 
still  rising;  wages  were  still,  in  the  main,  stationary;  the  financier,  the  shipowner 
the  railway  magnate  and  the  contractor  had  been  treated  by  the  government  with 
indulgent  generosity;  the  workers  were  still  vainly  knocking  at  the  door.  As  Mr. 
Cole  has  rightly  pointed  out,  "Labor  alone  has  been  expected  to  make  every 
sacrifice  without  return  or  gratitude.  Employed,  the  worker  was  handed  over  to 
the  sweater;  unemployed,  he  fell  into  the  clutches  of  the  Relief  Committee;  as 
consumer,  he  was  the  victim  of  profiteers  whom  the  government  would  not  con- 
trol; but  as  soon  as  he  stirred  a  finger  in  his  own  interest,  he  was  proclaimed  a 
traitor  and  ordered  back  to  work.^ 

In  December,  1916,  the  Coalition  government  gave  way 
to  Lloyd  George's  administration,  which,  it  was  expected, 
would  act  with  greater  boldness  and  determination. ^  On 
June  12,  1917,  Mr.  Lloyd  George  appointed  a  commission  to 
inquire  into  industrial  unrest  throughout  England  and  Scot- 
land. The  commission  considered  its  work  of  such  urgency 
that  it  divided  itself  into  eight  panels  (corresponding  to  eight 
munition  areas) ;  they  all  reported  in  a  month.     The  reports 

'  Report  of  the  Sixteenth  Annual  Conference  of  the  Labor  Party,  p.  5. 
^Labour  Year  Book,  1916,  p.  46. 

'  The  Economist  (Commercial  and  Financial  Review  of  1916),  February,  1917, 
p.  289. 


GREAT    BRITAIN  lOI 

bear  the  ear  marks  of  too  great  a  dependence  upon  hearsays, 
and  of  quickly  drawn  conclusions  on  insufficient  and  hastily 
gathered  facts. 

The  commissioners  enumerate  many  reasons  for  unrest, 
but  all  put  in  the  forefront  as  the  leading  cause  the  fact  that 
the  cost  of  living  has  increased  disproportionately  to  the  ad- 
vance in  wages  and  that  distribution  of  food  supplies  is  un- 
equal. Not  only  do  they  consider  this  as  the  most  important 
of  all  causes  of  unrest  in  itself,  but  its  existence  in  the  minds 
of  the  workers  colors  many  subsidiary  causes,  in  regard  to 
which  in  themselves  there  might  have  been  no  serious  com- 
plaints. The  commissioners  speak  (Report  of  the  Commis- 
sioners for  the  Northeast  Area)  of  deep  seated  conviction  in 
the  minds  of  the  working  classes  that  the  prices  of  food  have 
risen  not  only  through  scarcity  but  as  the  result  of  manipula- 
tions of  prices  by  unscrupulous  producers  and  traders,'  of 
conviction  (Report  of  the  Commissioners  for  the  Yorkshire 
and  East  Midlands  Area)  that  "insufficient  steps  had  been 
taken  by  the  government  departments  to  prevent  profiteer- 
ing, exploiting  and  plundering,  such  as  made  the  poor  con- 
tribute heavily  to  the  abnormal  advantages  of  those  traders 
and  others,  who  by  their  selfishness  secured  immense  gains 
from  the  sacrifices  and  sufferings  of  the  poor."^ 

The  West  Midland  commissioners  stated  that  it  was  abso- 
lutely jiecessary  that  the  government  should  take  immediate 
steps  to  reduce  prices  and  prevent  profiteering.  The  London 
commissioners  recommended  the  fixing  of  maximum  prices ;  the 
North  Eastern  and  the  Yorkshire  commissioners  did  the  same, 
but  added  that  Exchequer  assistance  must  be  given  where 
necessary.^  The  Scotch  commissioners  suggested  that  either 
steps  should  be  taken  to  reduce  the  cost  of  the  necessaries  of 
life,  or,  if  this  were  not  possible,  the  public  should  be  brought 
to  understand  that  the  prevailing  high  prices  were  inevitable. 

1  Industrial  Unrest  in  Great  Britain,  U.  S.  Department  of  Labor  Statistics, 
Bulletin  No.  237,  p.  15. 

*  Ibid.,  p.  77. 

^  E.  Cannan:  "Industrial  Unrest,"  The  Economic  Journal,  December,  1917,  p. 
461. 


102  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

The  South  Wales  panel  proposed  among  other  things  that  the 
government  should  stamp  out  all  profiteering  in  food,  and  fix 
the  prices  to  be  charged  by  the  wholesaler,  the  middleman 
and  the  retailer. 

To  meet  these  recommendations  and  thus  to  restore  to  a 
certain  extent  domestic  tranquillity,^  all  the  essential  food- 
stuffs have  been  gradually  brought  under  control,  i.e.,  bread 
and  flour,  meat,  potatoes,  sugar,  tea,  milk,  butter,  cheese  and 
bacon.  Control  has  also  been  extended  to  certain  subsidiary 
foods  such  as  jam,  oatmeal,  dried  peas  and  beans,  chocolate 
and  sweetmeats,  and  also  to  feeding  stuffs  for  live  stock. 

Prices  are  being  fixed  at  every  stage  of  production  and  dis- 
tribution of  controlled  commodities,  from  the  stockyard  or 
barn  to  the  shop  counter.  The  speculative  middleman  has 
been  eliminated,  and  the  charges  that  may  be  made  by  the 
necessary  middleman  and  the  retailer  are  being  defined  and 
regulated  by  fixing  prices  or  profits. ^ 

These  measures  did  not  bring  the  expected  peace.  Govern- 
ment methods  of  controlling  the  food  situation  were  criticized 
severely  at  the  Labor  congress  held  during  the  latter  part  of 
December,  1917. 

Speaking  to  a  resolution  on  this  subject,  Robert  Smillie, 
leader  of  the  miners,  said : 

I  hope  the  government  will  take  it  that  we  put  this  forward  as  a  grave  warning 
to  them.  If  they  do  not  carry  out  at  once  the  spirit  of  the  resolution  they  may  take 
it  for  granted  that  the  workers  of  the  country  are  no  longer  going  to  stand  having 
their  wives  and  children  waiting  outside  shop  doors,  almost  begging  for  food  to 
be  sold  to  them. 

Dr.  Marion  Phillips,  of  the  executive  committee  of  the 
Women's  Labor  League,  said  that  unless  steps  were  taken  to 
improve  present  conditions  infant  mortality  would  rise  to  a 
degree  which  never  had  been  known. 

The  whole  policy  of  the  government,  declared  Bevan  of  the 
dock  workers'  union,  had  been  to  "play  into  the  hands  of  the 
American  ring.  Talk  of  food  control — there  will  soon  be 
nothing  left  to  control,"  he  said. 

^  The  Statist,  December  i,  1917,  p.  1120. 
^  Labour  Gazette,  November,  1917,  p.  398. 


GREAT    BRITAIX  IO3 

Resolutions  strongly  favoring  compulsory  rationing  for 
all  Britain  were  adopted  unanimously  by  the  National  Trades 
Union  convention  and  the  congress  of  the  Labor  party  and 
war  emergency  workers. 

The  working  men  protested  that  suffering  would  result  and 
was  resulting  from  inequitable  distribution  of  foodstuffs 
through  the  present  voluntary  rationing  scheme.' 

1  Chicago  Tribune,  December  30,  19 17. 


CHAPTER   VII 
Governmental  Control  and  Price  Fixing 

Food 

General 

After  the  declaration  of  war  there  was  a  sudden  and  rapid 
rise  in  prices  of  necessaries,  particularly  of  foodstuffs.  The 
reasons  for  this  rise  may  be  summarized  as  follows: 

(i)  With  the  mobilization  of  the  British  army  and  navy 
large  governmental  orders  had  to  be  immediately  filled.^ 

(2)  Many  householders  with  cash  at  their  command 
rushed  to  the  stores  and  began  laying  in  supplies  for  weeks, 
sometimes  for  months  in  advance  of  their  actual  needs.-  In 
smaller  places  shops  were  literally  bought  out  by  one  or  two 
purchasers.  This  "frenzied"  buying  was  due  to  fear  that  the 
existing  stocks  in  stores  would  become  exhausted  and  that 
prices  would  rise  abnormally  high. 

Some  dealers  took  advantage  of  conditions  to  realize  as 
much  as  possible  on  the  merchandise  which  they  had  on  hand. 

The  situation  was  aggravated  by  a  temporary  disorganiza- 
tion of  shipping  and  by  the  use  of  railway  facilities  for  war 
purposes;  this  made  it  difficult  for  dealers  to  get  new  supplies 
in  order  to  keep  up  stocks.  Poorer  classes  of  the  population 
who  could  purchase  only  from  day  to  day  as  they  needed 
the  commodity  were  thus  placed  in  an  extremely  difficult 
position. 

That  the  rise  in  prices  was  due  largely  to  a  panic  and  that  it 
was  not  warranted  by  the  conditions  existent  at  the  time,  is 
apparent  from  the  fact  that  the  English  and  Scottish  coop- 
erative wholesale  societies  after  a  study  of  the  situation  sent 
out  reassuring  messages  to  all  their  local  store  committees; 
they  advised  them  not  to  raise  prices,  but  to  restrict  sales  to 

^  The  Statist,  August  22,  19 14,  p.  466. 
^Labour  Gazette  (Canadian),  May,  1917,  p.  392. 

104 


GREAT    BRITAIN  IO5 

individuals  in  accordance  with  their  previous  average  rate  of 
purchases.' 

After  the  most  urgent  needs  of  the  government,  as  well  as 
the  demands  of  selfish,  thoughtless  or  overprudent  private 
buyers  were  satisfied,  prices  receded  from  their  high  levels. 
It  was  soon  recognized  that  there  was  enough  food  in  stock 
or  in  store  for  some  time  to  come.  As  the  result  of  special 
inquiries,  the  government  announced  that  the  supplies  of 
wheat  then  in  the  country  were  sufficient  to  meet  the  normal 
consumption  for  five  months,  the  supplies  of  potatoes  for 
nearly  twelve  months.  The  government  also  allayed  the 
fears  of  the  submarine  menace. ^ 

In  commenting  on  the  situation,  the  Statist  stated  that  "pro- 
vided always  that  the  British  fleet  retains  command  of  the 
seas  and  therewith  our  trade  routes  .  .  .  the  outlook  is 
rather  for  a  gradual  trend  to  low^er  prices  for  provisions  than 
to  any  appreciable  rise."^  No  reasons  were  given  for  the 
statement;  one  wonders  whether  this  prognostication  was  not 
based  upon  the  thought  that  the  withdrawal  of  the  Central 
Powers  as  buyers  from  the  world's  markets  would  reduce  the 
demand  and  thus  lower  prices.^ 

When  the  panic  was  at  its  height,  the  government,  in  re- 
sponse to  an  urgent  demand  for  some  immediate  action,  made 
an  interesting  attempt  to  influence  prices  without  taking  upon 
itself  the  responsibility  of  fixing  them. 

On  August  5,  1914,  a  Cabinet  committee  on  food  supplies, 
under  the  chairmanship  of  the  Home  Secretary,  met  "the 
representatives  of  certain  great  companies  owning  3,000 
distributing  shops  and  grocers'  federation  owning  14,000 
shops. "^  It  was  decided  that  a  standing  committee  should  be 
formed  to  advise  as  to  maximum  retail  prices  for  staple  articles 
of  food.    These  prices  were  not  compulsory,  but  represented 

1  American  Review  of  Reviews,  May,  1916,  p.  576. 

'  H.  S.:  "Early  Phases  of  Food  Control,"  The  Edinburgh  Review,  January, 
1918,  p.  108. 

'  The  Statist,  August  22,  19 14,  p.  466. 

*  F.  Eulenburg:  "Die  Bewegung  der  Warenpreise  wahrend  des  Krieges,"  Weli' 
wirtschaftliches  Archiv,  6  Band  (1915  II),  pp.  172-173. 

^London  Morning  Post,  August  6,  1914. 


I06       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

the  opinion  of  experts,  acting  under  governmental  sanction, 
as  to  what  purchasers  might  reasonably  regard  as  the  highest 
figures  they  ought  to  pay.  The  first  list  of  prices  was  issued 
August  7,  to  be  effective  through  the  loth.  These  prices 
gave  rise  to  complaint  that  the  committee  was  acting  in  the 
interest  of  dealers  rather  than  of  purchasers. 

The  following  were  the  home  and  colonial  quotations  and 
the  state  maximum  compared  for  August  7,  19 14:' 

Today's  Price,  per  State  Maximum,  per 
Articles                                        Pound  Pound 

s.  d.  s.  d. 

Granulated  sugar 03     (6.1  cents)  o  45  (  9.1  cents) 

Lump  sugar o  3H  7.1      "     )  05     (lo.i      " 

Butter 13     (30.4      "     )  16    (36.5      " 

Cheese  (colonial) 08^  (17.2      "     )  09^  (19.3      " 

Lard  (American) 0.7     (14.2      "     )  08     (16.2      " 

Margarin 08     (16.2      "     )  010  (20.3      " 

Bacon: 

British  (by  the  side) 12     (28.4      "     )  16    (36.5      " 

Continental  (by  the  side) 14    (32.4      " 

By  the  time  the  next  list  was  issued  on  August  1 1  current 
prices  had  risen  somewhat,  and  the  maximum  set  on  bacon 
by  the  committee  was  reduced  by  3d.  (6.1  cents)  for  British 
and  2d.  (4.1  cents)  for  continental  bacon. ^  Accordingly,  the 
current  and  maximum  prices  agreed,  except  that  the  commit- 
tee's price  for  sugar  was  still  fd.  (1.5  cents)  higher  than  cur- 
rent quotations.  The  committee  continued  to  issue  price 
lists  for  about  three  weeks,  by  which  time  prices  had  become 
fairly  stable,  though  at  a  higher  level  than  that  prevailing  in 
July.^  The  issue  of  price  lists  for  meat  was  resumed  early  in 
1915." 

On  August  10,  1914,  the  presidents  of  the  Board  of  Trade 
and  the  Board  of  Agriculture  and  Fisheries  met  a  number  of 
representative  millers  to  discuss  the  price  of  flour,  and  it  was 
arranged  to  have  a  standing  committee  of  the  millers  to  con- 
fer with  the  government  from  time  to  time.^  A  conference 
was   also   held   with   representatives  of   the   Meat   Traders' 

1  The  Daily  Citizen,  Saturday,  August  8,  1914. 

"^Labour  Gazette,  August,  1914,  p.  283. 

^  U.  S.  Bureau  of  Labor  Statistics,  Bulletin  No.  170,  pp.  12-13. 

*  Labour  Gazette  (Canadian),  May,  1917,  p.  396. 

^  Board  of  Trade  Journal,  August  13,  1914,  p.  419.  * 


GREAT    BRITAIN  IO7 

Association.  The  prices  of  flour  were  fixed  August  17,  1914, 
by  an  agreement  between  the  President  of  the  Board  of  Trade 
and  the  millers'  committee.' 

A  weapon  to  protect  the  pubHc  from  hoarding  and  from  cor- 
ners in  foodstuffs  was  provided  by  the  passage  on  August  10, 
1914,  of  the  "Unreasonable  Withholding  of  Food  Supplies 
Act"  (4  and  5  Geo.  V,  ch.  51).  The  act  was  repealed  by 
the  Articles  of  Comxmerce  Act,  which  became  law  on  August 
28,  1914  (4  and  5  Geo.  V,  ch.  65).  This  latter  act,  similar  in 
nature  to  the  first  one,  authorized  the  Board  of  Trade,  if 
authorized  by  proclamation,  to  take  possession  of  any  articles 
of  commerce  unreasonably  withheld,  upon  payment  of  a 
reasonable  price  determined  by  agreement  with  the  owners 
or  by  the  arbitration  of  a  judge  selected  by  the  Lord  Chief 
Justice.  By  a  proclamation  of  September  17,  1914  (No.  1403) 
the  Board  of  Trade  was  given  authority  to  exercise  the  power 
described  in  this  act  with  respect  to  "any  article  of  com- 
merce." In  Jersey  the  power  to  take  possession  of  articles 
under  this  act  was  exercised  by  the  Defense  Committee,  and 
persons  authorized  by  them  {Board  of  Trade  Journal,  Octo- 
ber 15,  1914,  p.  162). 

It  does  not  appear  that  the  power  granted  by  this  act  has 
ever  been  specifically  exercised.  Complaints  having  been 
made  at  one  time  concerning  the  rise  in  the  price  of  wheat 
and  flour,  the  Board  of  Agriculture  and  Fisheries  declared 
that  there  had  been  no  improper  withholding  of  supplies. - 

Among  other  steps  taken  by  the  government  on  the  out- 
break of  the  war  was  the  setting  up  of  a  Cabinet  Committee 
on  Food  Supplies.  Returns  of  stocks  of  all  foodstuffs  in  the 
country  were  obtained,  and  arrangements  made  for  the 
periodical  collection  of  this  information.  Soon  after  the  out- 
break of  the  war  export  of  foods  was  prohibited  except  under 
license.  A  similar  action  was  taken  a  couple  of  months  later 
with  regard  to  feeding  stuffs  for  animals. 

For  the  purpose  of  maintaining  the  country's  food  supply, 

^ 'Board  of  Trade  Journal,  August  20,  1914,  p.  485. 
"^  Ibid.,  January  14,  1915,  p.  100. 


I08  PRICES    AND    PRICE    CONTROL    DURING   THE   WAR 

a  plan  for  state  Insurance  of  ships  and  cargoes  was  hastily 
devised  and  adopted.^  In  the  case  of  ships  the  government 
was  to  insure  all  war  risks  at  a  flat  rate  of  premium  ranging 
from  I  to  5  per  cent.  For  cargoes  a  special  insurance  depart- 
ment was  set  up  with  an  advisory  board  to  fix  the  rate  of 
premiums. 

Among  the  other  early  steps  taken  by  the  government  in 
connection  with  the  control  of  food  were  the  appointment  of 
the  Royal  Sugar  Commission  and  the  establishment  of  agen- 
cies entrusted  with  the  purchase,  shipment,  storage  and  dis- 
tribution of  meat,  wheat  and  flour.  Excepting  these  measures, 
the  government,  during  the  first  two  years  of  war,  followed 
largely  the  plan  of  not  interfering  with  production,  distribu- 
tion and  prices  of  foods.  Toward  the  end  of  191 6  the  poor 
harvests  in  North  America,  South  America  and  Europe,  the 
increasing  shortage  of  tonnage  due  to  commandeering  by  the 
government  and  losses  by  submarines,  the  growing  discontent 
of  the  people  with  what  they  considered  governmental  neg- 
ligence, the  rapidly  expanding  indebtedness  and  the  necessity 
to  pay  high  prices  for  all  that  the  government  was  buying, 
the  inability  to  forecast  how  long  the  war  would  last  and  the 
certainty  that  if  it  lasted  much  longer  Great  Britain  would 
experience  great  difficulties  in  bringing  food  into  the  country, 
all  influenced  the  government  to  change  its  policy  for  that  of 
strict  measures  of  control. 

Accordingly,  on  November  16,  December  5  and  December 
22,  191 6,  Orders  in  Council  were  issued  which  amended,  with 
this  aim  in  view,  the  regulations  (called  the  Defense  of  the 
Realm  Consolidation  Regulations,  1914)  under  the  Defense 
of  the  Realm  Consolidating  Act,  19 14.  These  orders  gave  the 
Board  of  Trade  wide  powers  to  control  any  "articles  of  com- 
merce, the  maintenance  of  which  is  important  as  being  part 
of  the  food  supplies  of  the  country,  or  as  being  necessary  for 
the  wants  of  the  public."^     The  Board  of  Trade's  orders, 

*  U.  S.  Bureau  of  Labor  Statistics,  Bulletin  No.  170,  p.  14. 

"'Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  1917,  p.  ^97; 
see  also  Board  of  Trade  Journal,  November  23,  1916,  pp.  566-570;  December  14, 
1916,  pp.  795-796,  and  December  28,  1916,  p.  945. 


GREAT    BRITAIN  IO9 

under  the  regulations,  "may  be  made  either  so  as  to  apply- 
generally  or  so  as  to  apply  to  any  special  locality  or  so  as  to 
apply  to  any  special  supplies  of  any  article,  or  to  any  special 
producer,  manufacturer  or  dealer."  The  orders  provided 
that  "a  person  shall  not  (subject  to  any  exceptions  contained 
in  the  order  applying  this  provision)  directly  or  indirectly  sell 
or  offer  for  sale  any  article  to  which  this  provision  is  applied 
at  a  price  exceeding  by  more  than  the  amount  named  in  the 
order  the  corresponding  price  of  the  article  at  a  date  specified 
in  the  order"  (the  corresponding  price  to  be  settled,  in  case 
of  difference,  by  the  Board  of  Trade).  It  gave  the  Board  of 
Trade  the  power  to  requisition  supplies,  to  request  informa- 
tion as  to  stocks,  to  hold  inquiries,  etc.  The  only  price- 
fixing  orders  issued  by  the  Board  of  Trade  directly  were 
two  orders  regulating  the  price  of  milk. 

The  Board  of  Trade  Journal  of  December  14,  1916,  speaks 
of  the  appointment  of  Lord  Davenport  as  Food  Controller. 
Upon  him  fell  the  responsibility  of  administering  the  new 
regulations  adopted  for  the  purpose  of  controlling  supplies 
and  prices  of  food.  For  a  short  time  after  his  appointment 
the  Food  Controller  was  dependent  upon  the  Board  of  Trade 
for  the  issuance  of  orders ;  he  lacked  the  necessary  authority, 
arrangements  not  having  been  completed  for  the  transfer  to 
him  of  the  powers  of  the  Board  of  Trade.  This  was  done 
on  December  22,  1916,  when  the  New  Ministries  and  Sec- 
retaries Act  (6  and  7  Geo.  V,  ch.  687)  was  passed.^  The 
act  authorized  the  King  for  the  purpose  of  economizing  and 
maintaining  the  food  supply  of  the  country  to  appoint  a 
Food  Controller,  the  latter  to  "hold  ofiice  during  His  Majesty's 
pleasure." 

Upon  the  Food  Controller  has  been  placed  the  duty  to 
regulate  the  supply  and  consumption  of  food  as  well  as  to 
encourage  its  production. 

In  accordance  with  this  act  certain  of  the  Defense  of  the 
Realm  (Consolidation)  Regulations  which  were  issued  at  the 
outbreak  of  the  war  were  so  amended  as  to  confer  on  the  Food 

1  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  1917,  p.  398. 


no  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

Controller  some  of  the  powers  which  heretofore  were  vested 
in  the  Board  of  Trade.  The  new  regulations  give  the  Con- 
troller large  discretionary  powers  with  respect  to  the  issue  of 
orders  regulating  the  production,  manufacture,  treatment, 
storage,  distribution,  supply,  sale  or  purchase  of  any  article 
(including  orders  as  to  maximum  and  minimum  prices). 

The  Food  Controller  may  take  over  from  private  possession 
any  goods  on  such  terms  as  he  may  direct,  where  it  appears 
to  him  necessary  or  expedient  to  do  so.  He  also  can  demand 
information  from  every  holder  of  stocks  of  goods  as  to  the 
amount  held,  price  paid  or  received,  cost  of  production,  etc. 
He  may  establish  control  over  any  food  producing  factory  or 
workshop;  the  occupiers  of  every  such  factory  must  then 
comply  with  his  directions  as  to  the  management  and  use  of 
premises.  He  is  given  power,  in  conjunction  with  the  Board 
of  Agriculture,  to  take  possession  of  any  land  improperly 
cultivated  and  take  any  machinery  or  farm  stocks  which  may 
be  required  for  the  better  cultivation  of  such  land.^ 

The  amended  Defense  of  Realm  regulations  confer  upon 
the  Board  of  Trade  powers  similar  to  those  exercised  by  the 
Food  Controller  regarding  any  articles  to  which  the  latter's 
powers  do  not  extend. 

The  first  work  undertaken  by  the  Food  Controller  was  to 
take  a  census  of  the  stock  of  food  on  hand  and  to  estimate 
the  visible  supply  of  important  commodities. - 

It  is  difficult  to  see  from  subsequent  orders  of  the  Food 
Controller  of  what  benefit  to  the  Administration  was  this 
preliminary  step,  so  essential  in  any  comprehensive  scheme  of 
price  fixing.  There  does  not  seem  to  have  been  any  definite 
rule  of  conduct,  any  thought  out  plan  of  action  in  what  Lord 
Davenport  did  during  his  tenure  of  office  in  the  first  part 
of  191 7.  Order  after  order  was  promulgated,  only  to  be 
amended  and  hastily  reamended,  without  serious  considera- 
tion of  the  problems  involved.     In  Lord  Davenport's  defense, 

_  1  Defense  of  the  Realm  Manual  (4th  Enlarged  Edition),  May  31,  1917,  Regula- 
tions 2F  to  2J. 

^  British  and  Canadian  Food  Regulatio7i,  65th  Cong.,  ist  Sess.,  Senate  Doc.  No. 
47,  p.  17. 


GREAT    BRITAIN  III 

one  may  say  that  the  office  of  the  Food  Controller  was  created 
at  a  time  of  intense  agitation,  when  the  nation  was  clamoring 
for  immediate  action,  when  on  all  sides  were  heard  accusations 
that  the  government  had  been  playing  into  the  hands  of  the 
rich,  of  the  "profiteers,"  to  the  utter  disregard  of  the  inter- 
ests of  the  great  mass  of  common  people. 

Lord  Davenport  resigned  because  of  ill  health  in  the  latter 
part  of  May,  191 7,  and  Lord  Rhondda  was  appointed  Food 
Controller  in  his  stead.  Whatever  may  be  one's  opinions 
regarding  price  fixing,  one  must  admit  that  Lord  Rhondda's 
handling  of  the  problem  from  the  very  first  day  of  his  appoint- 
ment was  much  more  careful,  thorough  and  systematic  than 
that  of  his  predecessor.  His  idea  was  to  fix  prices  of  those 
articles  of  prime  necessity  over  the  supply  of  which  he  could 
obtain  effective  control  at  all  stages  from  the  producer  down 
to  the  retailer;  in  this  determination  of  prices  he  followed  as 
far  as  possible  the  principle  of  allowing  a  reasonable  prewar 
profit  for  those  engaged  in  the  production  and  distribution. ^ 
Issuing  one  order  after  another,  Lord  Rhondda  gradually 
tightened  his  grip  on  business,  and  established  a  far  reaching 
and  rigid  supervision  of  all  food  articles;  the  work  of  man- 
ufacturers and  merchants  became  regulated,  maximum  prices 
were  established  and  for  certain  products  (sugar,  meat)  ra- 
tioning cards  were  issued.  A  statement  which  Lord  Rhondda 
gave  out  in  December,  191 7,  offers  a  concise  outline  of  the 
system  he  adopted  for  Great  Britain.- 

According  to  this  statement,  the  framework  of  the  British 
machinery  of  control  is  formed  in  the  civil  service.  They  are 
the  administrators,  but  in  all  cases  the  Food  Controller  secures 
the  best  available  business  men  to  advise  them,  as  well  as  a 
number  of  expert  committees  dealing  with  almost  every  food 
commodity. 

A  Costing  Department,  under  the  direction  of  chartered 
accountants,  has  been  set  up,  through  which  the  profits  made 

^  The  Liberal  Magazine,  August,  1917,  p.  301;  see  also  The  Economist,  July  28, 
1917,  pp. 115-116. 
*  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  December,  191 7,  pp. 

lOO-IOI. 


112  PRICES   AND    PRICE   CONTROL   DURING   THE    WAR 

by  any  manufacturer  or  retailer  of  food  can  be  ascertained. 
The  country  has  been  divided  into  separate  areas,  in  each  of 
which  a  responsible  firm  of  accountants  has  been  appointed  by 
this  department  to  do  the  necessary  work.  Reasonable  profit 
based  on  prewar  rates  is  added  to  the  present  cost  and  price 
limits  agreed  on  that  basis,  after  consultation  with  the  repre- 
sentatives of  the  trades  concerned. 

Decentralization  is  obtained  by  dividing  Great  Britain  into 
sixteen  food  divisions,  consisting  of  so  many  counties.  Each 
division  is  under  the  superintendence  of  a  commissioner  ap- 
pointed by  the  Food  Controller.  In  each  of  these  divisions 
the  borough,  urban  or  rural  district  councils,  or  other  local 
authorities,  appoint  local  food  committees,  with  limited 
powers  and  certain  discretion,  to  carry  out  such  regulations 
as  regards  price  and  distribution  as  may  be  issued  from 
headquarters. 

Local  tradesmen  are  registered  with  their  local  committees, 
and  if  any  tradesman  does  not  carry  out  regulations  and  orders 
he  may  be  struck  off  the  register  and  prevented  from  further 
trading.  The  various  orders  fixing  or  amending  the  maximum 
prices  of  meat,  milk,  potatoes,  bread,  etc.,  are  communicated  to 
the  local  committees  and  the  trades  and  the  public  are  informed 
through  the  daily  and  trades  press.  A  staff  of  inspectors  is 
kept  at  headquarters  and  a  number  of  sentences  have  been 
imposed  by  magistrates  throughout  the  country  for  contra- 
vention of  the  regulations.  The  general  penalty  is  a  fine  not 
exceeding  £ioo  or  a  term  of  six  months'  imprisonment  with 
or  without  hard  labor,  or  both.  This  punishment  may  be 
inflicted  according  to  the  offense. 

Lord  Rhondda  made  also  arrangements  as  rapidly  as  pos- 
sible for  securing  control  of  all  imports  of  foodstuffs  in  coop- 
eration with  the  American  and  Canadian  food  controllers.^ 

An  Order  in  Council,  dated  June  28,  amended  the  Defense 
of  the  Realm  Regulations.  Among  other  amendments,  it 
conferred  on  the  Food  Controller  the  same  powers  as  were 

1  H.  S. :  "  Early  Phases  of  Food  Control,"  The  Edinburgh  Review,  January,  1918, 
p.  120. 


GREAT    BRITAIN  II3 

previously  granted  to  the  Admiralty,  Army  Council  and  Minis- 
try of  Munitions  regarding  the  requisitioning  of  goods  and  the 
controlling  of  prices.  This  amendment  gave  Lord  Rhondda 
the  authority  to  requisition  the  whole  or  part  of  the  output  of 
any  factory  and  to  pay  a  price  based  on  the  cost  of  production, 
with  an  addition  of  a  prewar  rate  of  profit,  without  regard  to 
the  price  ruling  on  the  market.  Similar  powers  have  been 
given  for  dealing  with  growers  or  other  producers.  Where 
goods  are  requisitioned  from  a  bona  fide  merchant  or  dealer, 
the  price  is  determined  by  the  price  paid  by  him  for  the  goods, 
provided  that  such  price  is  not  unreasonable,  and  by  the  rate 
of  profit  which  he  would  normally  earn  under  prewar  condi- 
tions, provided  that  such  profit  is  not  excessive.' 

Lord  Rhondda's  decentralization  scheme  led  to  the  passage, 
on  August  22,  1 91 7,  of  the  Food  Control  Committees  Order, 
191 7  (No.  869). 2  This  order  requested  local  authorities  to 
appoint  food  control  committees,  whose  functions  would  be 
to  administer  a  new  scheme  of  sugar  distribution,  to  continue 
the  campaign  for  food  economy,  to  deal  with  other  food  sup- 
plies such  as  bread  and  meat,  and  to  assume  special  respon- 
sibilities with  regard  to  food  prices.  The  appointment  of 
food  control  committees  was  a  step  towards  decentralization, 
preparatory  to  the  fixing  of  a  general  scale  of  prices  on  many 
necessary  foodstuffs.  The  committees  were  entrusted  with  the 
enforcement  of  this  scale;  they  were  also  asked  to  advise  on 
any  modification  of  it  that  may  be  shown  to  be  necessary 
in  their  districts. 

Food  control  committees  thus  constituted  consist  of  not 
more  than  twelve  members  each.;  each  committee  must  in- 
clude at  least  one  woman  and  one  representative  of  Labor, 
A  food  control  committee  may  appoint  subcommittees,  con- 
sisting wholly  or  partly  of  the  members  of  the  committee,  and 
may  delegate  to  the  subcommittee,  so  far  as  the  Food  Con- 
troller may  direct,  any  of  its  powers  and  duties. 

From  a  survey  of  the  orders  issued  by  the  Food  Controller 

^  Board  of  Trade  Journal,  July  5,  19 17,  y>.  17. 

^  Monthly  Review  of  U.  S.  Bureau  of  Labor  Statistics,  November,  1917,  pp.  98- 
100;  see  also  Labour  Gazette,  August,  19 17,  p.  276. 


114  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

it  appears  that  at  the  beginning  of  191 8  all  the  principal  food- 
stuffs— bread,  meat,  milk,  butter,  cheese,  potatoes,  sugar, 
tea  and  bacon — have  been  brought  under  control,  while  fixed 
prices  also  rule  in  regard  to  many  articles  of  secondary  im- 
portance, such  as  dried  peas,  beans,  rice,  sago,  tapioca,  oat- 
meal, jam,  sweetmeats  and  chocolate.-^  The  consumption  of 
meat,  butter,  margarin  and  sugar  is  controlled  by  cards. 
The  consumer  must  select  his  retailer  and  the  latter  receives 
supplies  for  distribution  according  to  the  number  of  his 
customers. 

Sugar 

The  only  foodstuff  the  supply  and  distribution  of  which  the 
government  undertook  to  control  from  the  earliest  stages  of 
the  war  was  sugar.  The  reason  for  this  action  was  the  sudden 
discontinuance  of  imports  which  in  normal  times  came  largely 
from  Germany  and  other  European  countries.  On  Septem- 
ber II,  1 9 14,  a  Royal  commission  was  appointed  to  "purchase, 
sell  and  control  the  delivery  of  sugar  on  behalf  of  His  Majes- 
ty's government"  and  generally  to  take  such  steps  as  would 
be  necessary  for  the  purpose  of  maintaining  supplies.^  One 
of  the  first  things  the  government  did  was  to  buy  up  stocks 
all  over  the  world,  particularly  in  the  East  and  West  Indies.^ 
During  the  latter  part  of  September  and  in  October,  the  com- 
mission purchased  by  private  negotiation  over  900,000  tons 
of  sugar,  raw  and  refined.  These  large  purchases  were 
prompted  by  fear  that  sugar  production  on  the  continent 
of  Europe  would  cease  and  that  all  countries  would  have  to 
depend  upon  the  cane  sugar  output.  \A'hile  the  British  Gov- 
ernment was  buying,  the  price  of  sugar  in  the  world's  markets 
more  than  doubled ;  the  price  dropped  again  as  soon  as  the 
commission  withdrew  from  the  market.  The  sugar  was  sold 
by  the  commission  to  refiners  at  a  fixed  price  which  protected 
the  government  from  loss,  at  the  same  time  making  it  possible 
to  retail  the  sugar  at  3fd.  (7.6  cents)  per  pound  for  granulated 

'  The  Statist,  December  i,  1917,  p.  1120. 

2  Board  of  Trade  Journal,  September  24,  19 14,  p.  810. 

^Labour  Gazette  (Canadian),  May,  1917,  p.  396. 


GREAT    BRITAIN  II5 

sugar  and4^d.  (9.1  cents)  for  good  cubes  ;^  the  price  of  granu- 
lated sugar  before  the  war  was  about  2|d.  (5  cents). 

Having  bought  supplies  at  a  higher  price  than  that  which 
subsequently  ruled  in  the  open  market  and  being  faced  with 
a  heavy  loss  on  its  transaction,  the  government  passed  on 
October  14,  1914,  a  law  temporarily  prohibiting  all  sugar 
imports  into  the  British  Isles.  The  whole  procedure  was  de- 
nounced in  many  quarters  as  an  ill  devised  speculation,  the 
only  tangible  result  of  which  was  the  compelling  of  British 
sugar  users  to  pay  higher  prices  than  those  that  would  have 
prevailed  without  governmental  interference.  Because  of 
"McKenna's  gamble  in  sugar,"  the  consumers  were  cut  off 
from  the  world's  supplies,  wrote  the  Spectator.-  The  commis- 
sion acknowledged  that  there  have  been  times,  notably  at 
the  end  of  1914,  during  which  the  price  of  sugar  in  outside 
markets  has  been  quoted  at  rates  below  those  at  which  the 
sugar  was  being  placed  on  the  British  market,  but,  according 
to  the  commission's  report,  "at  those  times  the  quotations 
have  usually  been  the  result  of  transient  influences  (including 
often  the  commission's  own  absence  from  the  market)  and 
have  been  no  true  indication  of  what  prices  would  have  ruled 
under  normal  conditions."^  Mr.  Layton  thinks  that  in  view 
of  the  uncertainty  at  the  outbreak  of  the  war  it  is  unreason- 
able to  blame  the  government  for  having  taken  action. 
Events  proved  that  beet  sugar  was  available  for  consumption 
in  Europe.  If,  however,  the  commission's  fears  were  justified, 
England  "might  have  been  very  hard  hit."*  The  explana- 
tions offered  are  decidedly  weak;  they  do  not  give  any  valid 
justification  either  for  the  hastiness  of  the  commission's 
decision,  unwarranted  by  facts,  or  for  the  clumsiness  with 
which  the  decision  was  executed. 

The  Royal  commission's  scheme  of  distributing  sugar  to 
wholesalers  was   based   on   the  distribution  of   1915.      In  a 

1  U.  S.  Bureau  of  Labor  Statistics,  Bulletin  No.  170,  p.  14. 

^  The  Spectator,  January  13,  1915. 

'First  (interim)  report  of  the  Royal  Commission  on  the  Sugar  Supply,  Cd. 
8728;  quotation  from  Labour  Gazette,  October,  19 17,  p.  359. 

*  W.  T.  Layton:  "State  Control  of  Prices  and  Production  in  Time  of  War," 
The  Political  Quarterly,  May,  1915,  pp.  82-83. 


Il6  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

memorandum  issued  in  January,  191 7,  the  commission  laid 
down  that  the  British  refiners  should  continue  to  issue  sugar 
only  to  their  191 5  customers,  the  quantities  issued  to  be 
proportionate  to  those  of  191 5.  the  proportion  varying  from 
time  to  time,  in  accordance  with  the  general  proportion  which 
all  available  supplies  bear  to  the  total  quantity  used  or  dis- 
tributed in  191 5.  The  sugar  commission  was  to  continue  to 
distribute  sugar  at  its  disposal  to  its  1915  customers,  giving 
each  as  his  share  of  available  sugar  the  amount  proportionate 
to  his  total  use  or  distribution  in  1915,  of  all  sugar  other  than 
the  British  refined.  Wholesale  dealers  were  instructed  to 
distribute  to  their  customers  on  the  same  principle,  that  is 
to  say,  to  let  each  of  their  customers  of  the  year  191 5  have 
his  equivalent  proportion  of  the  available  supplies.^ 

The  commission's  selling  prices  to  wholesalers  have  been 
fixed  with  a  view  to  earning  returns  which  should  do  no  more 
than  cover  all  expenses  of  the  commission  and  provide  an 
adequate  margin  against  contingencies.  In  connection  with 
the  control  of  retail  prices  the  means  possessed  by  the  commis- 
sion have  been  only  slight,  but,  according  to  the  commission's 
report,  they  appear  to  have  been  generally  effective  up  to  the 
end  of  1 916,  though  less  adequate  to  the  increased  difficulties 
in  the  latter  part  of  that  year.^ 

The  plan  thus  adopted  by  the  commission  was  to  sell  the 
sugar  to  grocers  at  a  price  much  below  that  which  would 
have  prevailed  in  an  unregulated  market;  the  sugar  was  sold 
in  the  proportions  in  which  the  total  was  divided  just  before 
the  war.  The  government  insisted  on  the  grocers  selling  sugar 
at  retail  prices  corresponding  to  the  wholesale  prices  charged 
by  the  government. 

The  distribution  was  entirely  out  of  date.  There  has  been 
so  much  shifting  in  the  population  since  the  war  that  many 
parts  of  the  country  were  receiving  an  excess  supply  of  sugar, 
while  other  areas  (munition  plant  districts,  etc.)  were  under- 
served.^     In  the  early  part  of  1917,  a  joint  committee,  repre- 

1  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  June,  1917,  p.  936. 

^  Labour  Gazette,  October,  19 17,  p.  359. 

*  E.  Cannan:  "Industrial  Unrest,"  Economic  Journal,  December,  1917,  p.  936. 


GREAT    BRITAIN 


117 


senting  the  Parliamentary  Committee  of  the  Cooperative 
Congress  and  the  War  Emergency  Workers'  National  Com- 
mittee, submitted  to  the  Food  Controller  a  report  in  which 
they  showed  the  inadequacy  of  the  plan  adopted  by  the  gov- 
ernment for  the  purpose  of  insuring  equable  distribution  of 
sugar.  It  was  pointed  out  that  the  average  increase  in 
membership  of  the  cooperative  societies  amounted  to  2,291 
per  society  and  that  their  available  supplies  of  sugar  in  191 5 
amounted  to  3  pounds  5  ounces  per  member  (or  family  of 
from  4  to  5  persons)  per  week;  in  191 6  the  quantity  was 
reduced  to  i  pound  14  ounces  for  the  same  period,  an  amount 
considerably  below  that  which  the  sugar  commission  professed 
to  guarantee.  It  was  also  brought  out  in  the  report  that  no 
arrangements  had  been  made  to  meet  the  increased  demand  in 
those  places  where  there  have  been  large  additions  of  popu- 
lation.^ The  attention  of  the  Controller  was  drawn  to  the 
course  adopted  by  some  retail  grocers  of  supplying  sugar  only 
to  those  persons  who  bought  some  other  specific  commodity. 
The  public  was  finding  these  conditioned  sales  inconvenient, 
annoying  and  just  as  expensive  as  if  the  grocers  were  permitted 
to  sell  sugar  for  what  it  would  fetch.  The  grocers'  predica- 
ment consisted  in  that  they  had  no  workable  guidance  as  to 
whom  to  sell  and  in  what  proportions.  They  knew  that  the 
rule  "as  in  1913"  could  not  be  applied;  that  selling  in  equal 
rations  only  to  old  customers  meant  refusal   to  sell   to  all 


newcomers.  2 


Since  no  definite  rationing  system  was  adopted,  consumers 
did  not  see  why  retailers  should  not  sell  them  whatever 
amount  they  asked  for.  This  would  have  meant  compulsory 
sales  of  supplies  which  were  insufficient  to  go  around,  the 
serving  of  the  first  comers  and  letting  the  late  comers  go 
away  empty  handed.  According  to  Professor  Cannan,  "the 
Davenport  administration  did  not  see  much,  but  it  did  see 

'  The  Christian  Science  Monitor   (Boston),   February   16,   1917;  quoted  from 
Monthly  Review  of  U.  S.  Bureau  of  Labor  Statistics,  June,  1917,  p.  936. 
"^  Cannan:  op.  cit.,  p.  466. 


Il8  PRICES   AND    PRICE    CONTROL   DURING    THE    WAR 

this,  and  therefore  refused  to  yield  to  the  popular  clamor  for 
compulsory  sale."' 

The  Northwestern  Commissioners  in  their  part  of  the  Re- 
port on  Industrial  Unrest  state  that  if  other  necessaries  of 
life  are  to  he  controlled  and  distributed  as  sugar  has  been 
controlled  and  distributed  in  the  past  the  position  would 
become  exceedingly  dangerous.^  They  consider  that  the  real 
\alue  of  the  experiment  with  sugar  was  to  use  it  as  an  example 
of  how  not  to  do  it. 

Three  orders  relating  to  sugar  were  issued  by  the  Food 
Controller  in  February,  1917.  The  Dealings  in  Sugar  (Re- 
striction) Order,  dated  February  9,  1917,  prohibited  private 
dealing  in  sugar  outside  of  the  United  Kingdom.  The  two 
other  orders  considered  brewers'  sugar.^'  On  March  16 
manufacturers  were  limited  during  the  year  191 7  to  the  use 
of  40  per  cent  of  the  sugar  used  by  them  for  manufacturing 
purposes  during  1915.  The  order  applied  to  all  articles  ex- 
cept jam,  marmalade  and  condensed  milk.^  The  shortage  of 
sugar  led  to  the  issue  of  two  new  orders,  one  in  April  and  the 
other  in  May.  The  April  Order,  for  the  purpose  of  releasing 
for  domestic  consumption  sugar  of  a  better  quality,  permitted 
manufacturers  other  than  brewers  to  use  brewers'  sugar. ^ 
By  the  Sugar  (Restriction)  Order  No.  3,  1917,  the  Food 
Controller  has  reduced  the  amount  of  sugar  which  could  be 
used  by  the  manufacturers  from  40  per  cent  used  by  them  in 
19 1 5  to  25  per  cent.^ 

Of  special  interest  is  the  Food  (Conditions  of  Sale)  Order, 
1917,  which  came  into  effect  on  March  23,  1917.''  It  con- 
tained a  clause  that  "in  the  sale  or  proposed  sale  of  any  article 
of  food,  no  person  may  impose  or  attempt  to  impose  any 
condition  involving  the  purchase  of  any  other  article."  It 
was  particularly  directed  against  grocers  who  made  the  sale 

^  Cannan:  op.  cit.,  p.  467. 

^  Industrial  Unrest  in  Great  Britain,  U.  S.  Bureau  of  Labor  Statistics,  No.  237, 

P-  45- 

'  Board  of  Trade  Journal,  February  15,  1917,  p.  484. 
■'  Ibid.,  March  22,  1917,  p.  770. 
*  Ihid.,  April  5,  1917,  p.  18. 
®  Ibid.,  May  24,  1917,  p.  411. 
'  Ibid.,  March  29,  1917,  p.  81 1. 


GREAT    BRITAIN  II9 

of  sugar  conditioned  upon  other  purchases,  but  it  applied  also 
to  the  sale  of  other  articles  of  food. 

Passing  over  some  of  the  minor  orders,  such  as  the  Sugar 
(Domestic  Preserving)  Order,  1 9 1 7,  one  comes  to  the  last  impor- 
tant measure,  the  new  sugar  distribution  scheme.  The  scheme 
is  largely  an  adaptation  of  the  plan  proposed  by  the  Commis- 
sion of  Inquiry  into  Industrial  Unrest  (Northwestern  Com- 
missioners). Under  this  plan,  the  sugar  consumers  must 
provide  themselves  with  sugar  registration  cards,  which  they 
are  free  to  deposit  with  any  retailer  they  choose.  After  they 
have  chosen  the  retailer  they  become  tied  to  him,  as  the  latter 
receives  the  allowance  with  regard  to  each  card  deposited 
with  him  and  from  no  other  grocer  can  any  sugar  be  bought. 
The  retailers  were  forbidden  to  sell  sugar  after  October  i 
unless  they  held  certificates  of  registration  granted  to  them  by 
their  local  Food  Control  Committee.'  The  card  system  began 
to  be  employed  after  January  i,  191 8.  The  scheme  assures 
that  cheap  sugar,  a  gift  of  taxpayers  to  sugar  consumers,  will 
reach  them,  the  taxpayers,  as  Professor  Cannan  puts  it,  hav- 
ing in  addition  to  pay  the  cost  of  administering  this  somewhat 
indiscriminate  charity. "^  It  was  hoped  that  the  scheme 
would  do  away  with  congestion  in  retail  establishments  and 
with  long  queues  of  people  waiting  for  hours  in  front  of  a  store. 

Milk 

Fresh  milk  was  the  first  foodstuff  against  the  raising  of 
the  price  of  which  many  British  consumers  as  a  whole,  through 
municipalities,  registered  a  vigorous  protest.  Fresh  milk  was 
always  out  of  the  reach  of  the  very  poor,  those  with  a  family 
income  of  20s.  a  month  having  had  to  use  condensed  milk. 
The  number  of  those  who  had  to  give  up  fresh  milk  gradually 
grew  larger  and  larger,  and  it  was  the  knowledge  that  the 
elimination  of  milk  from  the  diet  impairs  the  health  of  the 
children    and    thus   injures  the  growing    population    of  the 

^Labour  Gazette,  September,  1917,  p.  318;  see  also  The  Economist,  August  11, 
1917.  p.  204;  and  Commerce  Reports,  October  15,  1917,  p.  204. 
^Cannan:  op.  cit.,  p.  467. 


120  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

country  which  prompted  the  government  to  revise  its  policy 
of  non-interference  with  regard  to  the  price  fixing  of  foods. 

An  Order  in  Council  (No.  792)  dated  November  16,  191 6, 
gave  the  Board  of  Trade  power  to  adopt  special  regulations 
for  the  maintenance  of  the  food  supply,  including  the  power 
to  fix  prices.'  Under  this  authority  the  Board  of  Trade  an- 
nounced on  November  23, 1916,  maximum  and  minimum  prices 
for  milk,  sold  in  wholesale  and  in  retail  trade. =  This  order 
was  amended  by  an  order  issued  on  December  12,  191 7,' 
under  the  authority  of  the  Food  Controller,  to  whom  were 
transferred  by  the  Order  in  Council  of  January,  191 7,  the 
powers  of  the  Board  of  Trade  relating  to  the  food  supply. 
Under  this  new  order,  the' price  of  milk  was  not  to  exceed  by 
more  than  a  specified  amount  the  price  in  the  corresponding 
month  before  the  war.  This  amount  was  2d.  (4  cents)  per 
quart  for  retail  milk  and  from  5§d.  (11  cents)  to  6^d.  (13 
cents)  per  imperial  gallon  for  wholesale  milk,  the  latter 
amount  if  milk  was  delivered  on  the  premises  of  the  buyer 
and  these  premises  were  not  used  as  a  creamery  or  factory. 
The  maximum  price  for  "accommodation"  milk  was  raised 
to  IS.  8d.  (41  cents)  per  imperial  gallon,  inclusive  of  all  charges 
for  transport  to  the  railway  station  at  which  delivery  is  taken 
by  the  purchaser.* 

Contracts  for  the  sale  of  milk  made  on  or  before  Novem- 
ber 15,  191 6,  were  allowed  to  remain  valid  for  their  full  period 
(up  to  April  I,  191 7)  even  if  the  price  stipulated  exceeded  that 
otherwise  permissible. 

This  milk  order  was  amended  by  the  Price  of  Milk  Order, 
1917  (No.  08),  dated  January  26,  1917.  The  general  effect 
of  the  new  order  was  to  provide  that  the  retail  price  of  milk 
in  any  month  should  not  exceed  the  retail  price  in  the  corre- 
sponding month  in  the  twelve  months  ending  March  31,  1914, 
by  more  than  2d.  per  imperial  quart,  subject  to  certain  excep- 
tions.5     The  Price  of  Milk  Order  (No.  2),  1917  (Order  No. 

^  Supra,  p.  108. 

2  Board  of  Trade  Journal,  vol.  95,  p.  570. 
^Ibid.,  p.  861. 

*  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  March,  1917,  P-  388. 
^Defense  of  the  Realm  Manual,  4th  enlarged  edition,  May  31,  1917,  pp.  305- 
309;  see  also  Labour  Gazette,  February,  191 7. 


GREAT    BRITAIN  121 

1 60),  dated  February  20,  191 7,  varies  from  the  previous  milk 
orders  with  regard  to  wholesale  prices.' 

As  some  farmers  seemed  to  have  been  under  a  misappre- 
hension regarding  wholesale  summer  prices  of  milk,  as  fixed 
by  the  Milk  Order  No.  68,  the  Controller  explained  that 
the  maximum  price  of  milk  in  the  summer  of  191 7  was 
to  be  6|d.  per  imperial  gallon  above  the  price  which  the 
farmer  obtained  in  the  summer  of  1913  for  milk  delivered  at 
the  premises  of  the  buyer  or  at  the  railway  station  of  the 
buyer,  under  a  contract  to  supply  a  minimum  quantity.  In 
case  of  milk  sold  under  other  conditions,  the  farmer  could  not 
charge  more  than  5^d.  per  gallon  above  the  price  of  the  sum- 
mer of  1913.  Any  one  charging  or  asking  a  price  higher  than 
the  maximum  fixed  was  guilty  of  a  summary  offense. ^ 

That  the  government  itself  recognized  the  impracticability 
and  inexpediency  of  maximum  prices  for  milk  and  that  it 
feared  the  effect  of  such  rigid  prices  upon  production  may  be 
seen  from  the  fact  that  shortly  after  the  promulgation  of  the 
last  two  orders  the  President  of  the  Board  of  Agriculture 
and  the  Secretary  for  Scotland  conferred  with  the  Food 
Controller  and  agreed  to  the  following  statement : 

The  prices  to  be  fixed  for  next  winter  will  be  considered  by  the  agricultural 
departments  in  good  time  before  the  period  for  making  contracts  arrives,  so  as  to 
make  the  maintenance  of  milk  production  certain  and  commercially  profitable  in 
comparison  with  other  branches  of  the  farming  industry.' 

The  haste  with  which  the  orders  were  issued  is  evidenced 
from  the  Food  Controller's  announcement  soon  after  the 
orders  were  promulgated  that  he  would  issue  an  amendment 
basing  the  increase  in  prices  of  milk  on  the  summer  prices  of 
1 914  instead  of  those  of  1913.-*  The  Board  of  Trade  Journal 
for  April  5,  191 7,  contains  a  notice  that  at  the  request  of 
the  President  of  the  Board  of  Agriculture  and  the  Secretary 
for  Scotland  the  Food  Controller  amended  the  Price  of 
Milk  Order,  so  as  to  allow  winter  contracts  which  under  that 

^  Labour  Gazette,  March,  1917. 

2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  June,  191 7.  P-  939;  see 
also  Board  of  Trade  Journal,  March  15,  19 17,  p.  72,o. 
^  Ibid.,  p.  939. 
*  Board  of  Trade  Journal,  March  29;  19 17,  p.  811. 


122  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

order  were  terminated  on  March  31  to  run  to  April  30,  and 
also  to  allow  the  prices  chargeable  In  April,  191 7,  to  be  cal- 
culated with  reference  to  the  prices  prevailing  in  March, 
1 914.'  The  inclusion  of  April  in  the  winter  months  of  1916- 
17  was  found  necessary  because  of  weather.  A  couple  of 
weeks  later  the  Food  Controller  gave  notice  that  unless  prices 
of  feeding  stuffs  were  substantially  reduced,  the  winter  con- 
tract prices  for  milk  in  191 7-1 8  will  be  not  less  than  is.  8d. 
per  gallon. 2 

On  September  7,  1917,  the  Milk  (Prices)  Order  was  issued, 
which  fixed  maximum  winter  prices  to  the  producer  as  follows: 
October,  is.  5d.  per  imperial  gallon;  November,  is.  7^d.,  and 
December,  January,  February,  March,  is.  9d.,  with  the  addi- 
tion in  each  case  of  the  actual  cost  of  railway  carriage  for 
delivery  to  the  railway  station  of  the  purchaser.  The  retail 
prices  were  limited  to  2s.  per  imperial  gallon  in  October,  191 7, 
and  to  2s.  4d.  per  imperial  gallon  thereafter  until  the  end  of 
March,  1918.  An  addition  of  id.  per  quart  was  permitted 
for  milk  delivered  in  bottles  to  the  consumers,  making  the 
retail  price  of  milk  7d.  per  quart  in  October  and  8d.  in  the 
five  following  months,' 

The  consumers  of  milk  were  informed  that  the  above  prices 
were  justified  because  of  increased  cost  of  production  and  dis- 
tribution and  that  unless  prices  based  on  increased  costs  are 
paid  the  continuity  of  supply  can  not  be  insured. 

The  prices  do  not  represent  any  reduction  on  the  maximum 
prices  of  the  preceding  order,  as  the  government  in  the  spring 
of  191 7  pledged  itself  not  only  not  to  reduce  the  price  of  milk 
but  to  allow  an  increase  in  order  to  secure  the  maintenance  of 
dairy  herds  at  full  strength.  The  local  food  control  commit- 
tees were  given  powers  to  take  measures  for  the  proper  dis- 
tribution of  milk.  To  safeguard  the  interests  of  the  poor 
2,200  tons,  equal  to  4,000,000  gallons,  of  whole  milk  were 
furnished  to  medical  ofificers  of  health  and  to  institutions. 

'  Board  of  Trade  Journal,  April  5,  1917,  p.  19. 

*/6i(i.,  April  19,  1917,  p.  113. 

^  Ibid.,  September  13,  1917,  p.  561. 


GREAT    BRITAIN  I23 

Further,  local  committees  were  authorized  to  provide  for  an 
adequate  supply  at  reduced  prices  to  infants  and  invalids.' 

Potatoes 

The  first  order  regulating  the  price  of  potatoes  was  issued 
on  January  9,  191 7,  by  the  Food  Controller,  after  consulta- 
tion with  the  Agricultural  Departments  of  Great  Britain  and 
Ireland.  It  was  to  apply  to  the  191 7  crop  and  fixed  the 
prices  as  follows: 

Potatoes  in  not  less  than  6-ton  lots,  f.  o.  b. 

115  s.  ($27.98)  per  ton  for  delivery  from  September  15  to  January  31; 
120  s.  ($29.20)  per  ton  for  delivery  in  February  and  March; 
130  s.  ($31.63)  per  ton  for  the  remainder  of  the  season.^ 

The  price  of  potatoes  in  June,  1916,  was  245s.  ($59.61)  as 
compared  with  87s.  6d.  ($21.29)  iri  June,  19I4.  At  the  time 
of  the  issuance  of  the  order  the  government  intended  the 
prices  to  be  contract  or  maximum  ones.  They  were  for 
produce  of  the  first  quality,  delivered  as  required,  in  sound 
marketable  condition.  Previous  to  the  issuance  of  this  order 
the  Board  of  Trade,  under  date  of  November,  1916,  brought 
out  an  order  requiring  a  return  of  stocks  of  potatoes  in  Great 
Britain.^  Two  orders  (one  for  Great  Britain,  the  other  for 
Ireland)  were  also  promulgated  for  the  purpose  of  safe- 
guarding the  supply  of  seed  potatoes  for  191 8  year's  crop.^ 
On  December  21,  1916,  the  Board  oj  Trade  Journal  announced 
that  arrangements  had  been  made  to  finance  a  scheme  for 
the  distribution  of  seed  potatoes.  The  President  of  the  Board 
of  Trade  has  invited  the  war  agriculture  committees  to  re- 
quest borough,  urban  and  parish  councils  to  ascertain  what 
quantity  of  seed  potatoes  is  required  in  each  village,  to  collect 
cash  with  orders  and  to  distribute  seed.  In  a  debate  which 
took  place  in  the  House  of  Commons  soon  after  the  issuance 
of  the  price  fixing  order,  Mr.  Curdy  asked  whether  the  prices 
fixed  were  maximum  or  minimum  prices  and  whether  the 
government,   since   it   fixed   prices   for  wheat  and   for  oats, 

1  The  Statist,  December  17,  1917,  p.  120. 

'^  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  19 18,  p.  402. 

'  Board  of  Trade  Journal,  December  21,  1916,  pp.  861-863. 

*  Ibid.,  p.  863. 


124  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

proposes  also  to  fix  them  for  artificial  manures  and  fertilizers. 
In  his  reply,  Bonar  Law  said  that  the  prices  in  the  order  were 
maximum.^  Mr.  Lough  thought  that  a  great  deal  of  harm 
has  been  done  by  the  order;  many  farmers,  according  to  him, 
were  prevented  from  planting  any  potatoes;  this  was  sure  to 
lead  to  a  tremendous  diminution  of  the  crop.^  The  President 
of  the  Board  of  Agriculture  replied  that  it  was  the  govern- 
ment's object  to  discourage  the  growth  of  potatoes.  It  is  diffi- 
cult to  see  why  the  Board  of  Agriculture  should  have  desired 
to  curtail  the  potato  crop,  which  in  191 6,  because  of  military 
drain  on  farm  labor,  the  falling  off  in  the  acreage  planted,  in- 
creased cost  of  production  and  bad  weather  when  the  crop 
was  ready  for  digging,  fell  from  7,476,458  tons  in  1914  and 
7,540,240  tons  in  1915  to  5,468,881  tons.  That  this  was  surely 
not  the  aim  may  be  seen  from  the  announcement  of  the  Under- 
secretary of  the  Board  of  Agriculture  on  the  next  day  that  the 
price  was  to  be  taken  as  minimum.  In  corroboration  of  this 
announcement,  the  Food  Controller  stated  on  January  25, 
191 7,  that  the  prices  fixed  for  potatoes  of  the  191 7  main  crop 
had  been  further  considered  and  that  in  view  of  a  possibility 
of  an  unfavorable  season  it  had  been  decided  that  the  prices 
named  for  potatoes  "shall  not  be  regarded  as  contract  prices 
but  as  minimum  prices  guaranteed  by  the  government  for 
potatoes  of  the  first  quality."^ 

Thus  the  pressure  of  public  and  agricultural  opinion  com- 
pelled the  government  to  revise  its  hastily  conceived  plans 
and  declare  that  it  did  not  intend  to  compel  the  farmer  to 

*  Parliamentary  Debates,  House  of  Commons,  191 7,  vol.  xc,  p.  26. 

-  Ibid.,  p.  61.    The  cost  of  growing  an  acre  of  potatoes  on  good  land  was  calcu- 
lated at  that  time  to  be: 

Seed £15  per  acre 

Manure 10  per  acre 

Rent  rates 3  per  acre 

Labor  (plowing,  cultivation) 9  per  acre 

Lifting  of  the  crop 3  per  acre 

£40  per  acre 

According  to  this  calculation  the  grower  on  the  basis  of  two  years'  average  crop 

(five  tons  per  acre)  would  have  expended  £40  per  acre,  for  which  he  would  have 

received  £30.    W.  W.  Berry:  "Food  Control  and  Hasty  Decisions,"  Contemporary 

Review,  February,  19 17,  p.  186. 

'  Board  of  Trade  Journal,  January  25,  191 7,  p.  264. 


GREAT    BRITAIN  125 

sell  his  potatoes  for  £5.153  a  ton,  but  that  this  price  was  a 
guaranteed  price  to  him.  Nothing  was  to  prevent  him  from 
selling  to  other  buyers  if  by  doing  so  he  could  obtain  better 
terms  with  regard  to  the  unsold  portion  of  the  1916  crop. 
The  Seed  Potatoes  (Growers'  Prices)  Order,  191 7,  dated  Janu- 
ary 19,  1917,^  gave  a  long  schedule  of  maximum  prices  for  seed 
potatoes,  according  to  the  variety  and  quality  of  potatoes. 
The  price  was  fixed  at  £12  a  ton  for  choice  early  varieties. ^ 
This  was  followed  on  February  i,  1917,  by  the  Potatoes, 
1916,  Main  Crop  (Prices)  Order,  191 7,  which  fixed  maximum 
prices  for  the  best  table  potatoes  of  the  1916  crop  if  sold  by 
the  grower,  as  follows  :^ 

For  delivery  in  February,  1917 £8  a  ton 

For  delivery  in  March  or  April,  19 17 £9  a  ton 

For  delivery  in  May  or  June,  1917 £10  a  ton 

The  order  provided  that  except  under  the  authority  of  the 
Food  Controller  no  table  potatoes  of  the  191 6  crop  may  be 
sold  after  February  19,  191 7,  by  or  on  behalf  of  any  person 
not  the  grower,  at  a  price  exceeding  i^d.  a  pound,  such  price 
including  all  charges  for  delivery  to  the  buyer  and  for  bags 
or  other  packages. 

The  growers'  prices  current  in  191 6  were  from  £12  to  £20 
per  ton  for  seed  potatoes  and  £10  to  £12  per  ton  for  table 
potatoes.  Since  a  substantially  reduced  price  was  likely  to 
lead  to  greatly  increased  demand,  Lord  Davenport  was  asked 
"how  [he]  was  going  to  insure  a  sufficiency  of  potatoes  to  last 
until  next  crop  comes  into  the  market?" 

The  order  of  February  i  was  obviously  issued  in  part  to 
protect  the  consumer  from  what  was  considered  extortionate 
prices  for  potatoes.  Within  a  few  weeks  Scotland,  which  was 
in  a  worse  position  than  England  in  regard  to  its  potato 
supply,  appealed  to  the  Controller  to  be  excluded  from  the 
operation  of  the  order;  at  the  same  time  English  retailers 
became  more  and  more  uneasy.     The  crop  was  a  bad  one, 

1  Statutory  Rules  and  Orders,  1917,  No.  50. 

2  Ibid.,  No.  89;  see  also  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics, 
June,  1917,  p.  933. 

•■'  Berry,  op.  cit.,  p.  185. 


126  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

Stocks  were  running  short  and  it  was  argued  that  the  lowering 
of  prices  by  increasing  consumption  would  only  result  in 
more  trouble.  Wholesale  merchants  complained  that  the 
farmers  were  holding  their  potatoes  for  better  prices  later  on 
and  that,  although  the  growers'  price  was  £8  per  ton  ($38.93) > 
as  much  as  £3  or  £4  ($14.60  or  $19.47)  was  charged  for  carting 
and  other  incidental  expenses.' 

\\'holesale  prices  were  not  restricted  by  the  order,  and 
wholesalers  were  thus  free  to  make  what  profit  they  could. 
Retailers,  therefore,  in  their  turn,  complained  that  while 
they  were  ordered  to  sell  at  a  maximum  price  ifd.  per  pound, 
which  amounted  to  £14  per  ton,  they  had  to  pay  whole- 
sale merchants  from  £14  to  £15.  The  retailers  maintained 
that  unless  they  could  buy  at  £10  los.,  they  would  refuse  to 
handle  potatoes.  In  his  reply  to  retailers,  the  Food  Controller 
stated  that  he  did  not  think  any  action  on  his  part  would  be 
necessary;  the  margin  between  growers'  and  retail  prices  was 
ample  to  allow  a  reasonable  profit  both  to  wholesalers  and  to 
retailers,  who  should  arrange  the  matter  among  themselves. ^ 
There  was  no  Improvement  In  the  situation,  and  the  matter  was 
brought  to  a  head  when  the  Lord  Mayor  of  Manchester  sent 
a  telegram  to  the  Prime  Minister,  representing  the  possibility 
of  an  immediate  potato  famine  In  Manchester  and  the  sur- 
rounding district,  and  requesting  that  the  subject  be  brought 
before  the  War  Cabinet.  He  proposed  that  the  order  be  so 
amended  as  to  make  It  compulsory  on  growers  to  release 
stocks  on  demand.  In  reply  to  this  message  the  Prime  Min- 
ister announced  on  February  17  that  Inasmuch  as  the  recent 
prolonged  frost  had  reduced  the  available  stocks  and  Inter- 
rupted their  regular  distribution,  it  had  been  found  necessary 
to  readjust  as  fairly  as  possible  the  Interests  of  all  parties. 

'  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  June,  191 7,  p.  933- 
Just  the  reverse  happened  from  what  was  predicted  by  some  writers.  "How," 
asked  Mr.  Berry,  "  is  the  Food  Controller  to  decide  which  farmers  are  to  have  their 
crops  taken  off  their  hands  in  September,  and  which  are  to  be  compelled  to  hold 
their  potatoes  until  May  or  June.  It  is  obviously  better  business  to  receive  £5  15s. 
in  September  than  to  wait  for  the  price  established  for  late  deliveries."  Berry, 
op.  cit.,  p.  185. 

2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  June,  1917,  p.  933. 


GREAT    BRITAIN  12/ 

At  the  Minister's  request  the  departments  concerned  conferred 
with  representatives  of  the  wholesale  and  retail  trades  (which 
they  should  have  done  before)  and  submitted  certain  propo- 
sals, which  were  approved  by  the  War  Cabinet.  According 
to  the  Prime  Minister's  announcement, 

the  price  which  the  growers  will  be  entitled  to  charge  to  dealers  and  merchants  for 
potatoes  after  the  present  date,  February  17,  up  to  March  31  will  be  £9  per  ton, 
free  on  rail  or  free  on  board.  After  that  the  corresponding  price  will  be  £10. 
The  price  at  which  the  growers  or  any  other  person  may  sell  to  the  retailer  will  be 
£10  los.  until  March  31,  and  £11  ids.  thereafter,  in  addition  to  the  cost  of  carriage. 
The  price  which  the  retailer  may  charge  will  be  i^d.  per  pound  up  to  March  31, 
and  ifd.  per  pound  thereafter  to  the  end  of  June.' 

In  conformity  with  this  announcement,  on  February  24 
an  amending  order  was  issued  by  the  Food  Controller,  which 
contained  the  maximum  prices  announced  by  the  Prime 
Minister.  The  new  prices  were  not  to  affect  existing  con- 
tracts.- 

A  grower,  according  to  the  interpretation  placed  on  the 
order  by  the  Food  Controller,  was  allowed  to  charge  after 
March  31  the  maximum  price  of  ifd.  per  pound  if  he  was 
selling  potatoes  in  the  ordinary  way  of  business,  by  means  of 
retail  sales. ^ 

Many  amendments  were  issued  in  connection  with  the 
regulation  of  seed  potato  prices.  In  the  latter  part  of  Feb- 
ruary, prices  were  fixed  for  the  sale  by  any  person  other  than 
the  grower  at  3d.  per  pound,  if  sold  in  quantities  of  one-half 
hundredweight  or  less.  In  case  of  sale  in  larger  amounts  the 
prices  were  those  charged  by  the  grower,  plus  cost  of  transpor- 
tation, and  £2  and  los.  per  ton  if  the  sale  were  over  one-half 
hundredweight,  but  less  than  10  hundredweight;  £1  and  5s.  per 
ton  if  the  sale  were  over  10  hundredweight,  but  less  than  4 
tons,  and  £1  per  ton  if  the  sale  were  4  tons  or  over.^  The 
Seed  Potatoes  (Prices)  Order  (No.  2)  191 7,  dated  April  3, 
extended  the  provisions  relating  to  seed  potatoes  to  the  end  of 

'  Board  of  Trade  Journal,  February  22,  1917,  p.  552. 

^  Ibid.,  March  i,  1917,  p.  613;  see  also  Potatoes,  1916  Main  Crop  (Prices)  Order 
No.  2,  1917,  dated  Fel)ruary  24,  1917.    Statutory  Rules  and  Orders,  No.  178. 
•■'  Board  of  Trade  Journal,  April  5,  1917,  p.  18. 
*  Ibid.,  March  i,  191 7,  p.  613. 


128  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

April,  as  well  as  raised  by  £2  per  ton  the  prices  chargeable  for 
seed  potatoes.^  An  amendment,  dated  April  30,  191 7,  ex- 
tended until  June  i,  1917,  the  orders  regulating  the  prices  at 
which  seed  potatoes  might  be  sold.^ 

A  measure  of  far  reaching  consequence  was  that  guarantee- 
ing to  the  grower  on  and  after  September  15,  1917,  a  price  of 
£6  per  ton,  in  lots  of  riot  less  than  4  tons,  for  all  sound 
marketable  potatoes  grown  in  1917.^    . 

The  potato  crop  in  1917  was  8,603,000  tons  or  3,154,119 
tons  larger  than  the  crop  of  191 6.  In  a  debate  in  the  House  of 
Commons  during  the  latter  part  of  October,  191 7,  the  govern- 
ment was  severely  criticized  by  Mr.  Runciman  and  others. 
The  guarantee  of  a  minimum  price  was  coupled  with  the 
prohibition  to  sell  potatoes  below  the  fixed  price  of  £6  a  ton. 
It  was  stated  that  in  Ireland  potatoes  were  spoiling  in  large 
quantities,  because  there  was  no  market  for  them  at  the  high 
price  fixed.  While  the  authorities  were  advising  the  people 
to  use  potatoes  instead  of  bread,  they  were  at  the  same  time 
fixing  the  price  of  potatoes  beyond  the  reach  of  the  poor.* 
Thus,  with  supplies  more  than  ample,  cheap  distribution  was 
hampered  by  official  control.  In  his  reply  to  critics,  Mr. 
Prothero  did  not  deny  that  there  might  be  a  surplus  of  pota- 
toes, much  of  which,  if  prices  were  to  be  maintained  at  a  mini- 
mum of  £6  per  ton,  was  likely  to  become  bad.  But,  he  affirmed, 
the  government  could  not  break  its  pledge  to  the  producer. ^ 

As  one  way  out  of  the  difficulty,  Mr.  Prothero  proposed 
that  some  of  the  surplus  should  be  used  for  mixing  with 
flour  for  making  bread  and  some  for  industrial  alcohol. 

A  general  license  was  issued  by  the  Food  Controller  on 
November  17,  191 7,  permitting  growers  to  sell  their  own 
potatoes  below  the  minimum  prices  fixed  by  the  government.* 
The  government,  however,  undertook  to  recoup  the  growers 

1  Board  of  Trade  Journal,  April  5,  p.  18;  see  also  Statutory  Rules  and  Orders, 
No.  178. 

2  Ibid.,  p.  230;  see  also  Statutory  Rules  and  Orders,  No.  402. 
^  Ibid.,  p.  230. 

*  The  Economisl,  October  27,  19 1 7,  p.  692. 
'"  Ibid.,  NovemVjer  3,  1917,  p.  726. 

*  Board  of  Trade  Journal,  November  22,  1917,  p.  403. 


GREAT    BRITAIN  1 29 

with  the  difference  between  the  price  at  which  they  sold  their 
potatoes  and  the  guaranteed  price  of  £6  per  ton.  In  order  to 
safeguard  the  Exchequer,  a  base  price  for  different  areas  was 
fixed  as  follows:  for  England  and  Wales  £5  per  ton,  free  on 
rail,  grower's  station;  for  Scotland  £4  los.  per  ton;  for  Ireland 
£4  per  ton ;  potatoes  sold  below  the  base  price  were  to  be  con- 
sidered as  sold  at  this  price.  The  cost  of  the  above  scheme 
to  the  government  was  estimated  at  £5,000,000.  It  placed 
a  burden  on  the  taxpayer  for  the  benefit  of  the  farmer. 
The  government,  in  justification  of  its  policy,  claimed  that 
this  guarantee  of  a  high  minimum  price  was  instrumental  in 
producing  the  great  crop  which  was  so  desirable.^  While 
admitting  that  this  claim  has  some  force  in  it,  the  Economist 
finds  "the  real  lesson  of  the  potato  comedy"  in  that  it  revealed 
the  danger  of  meddling  with  economic  laws ;  such  action  should 
never  be  taken  except  in  cases  of  urgent  national  necessity.^ 

Grain 

On  April  16,  191 7,  the  Food  Controller  issued  an  order  that 
no  wheat,  barley  (other  than  kiln  dried)  or  oats  harvested  in 
the  United  Kingdom  in  191 6  may  be  sold  at  prices  exceeding 

Wheat,  per  quarter 78s 

Barley,  per  quarter 65s 

Oats,  per  quarter 55s 

On  the  same  day  the  Food  Controller  took  over  all  barley 
other  than  home  grown  barley,  which  had  not  been  kiln  dried.'' 
The  average  Gazette  quotations  at  the  time  of  the  issue  of 
the  order  were  as  follows : 

Wheat,  per  quarter 85s.     2d. 

Barley,  per  quarter 71s.  10  d. 

Oats,  per  quarter 57s.     2d. 

The  fixed  prices  were  superseded  on  August  14,  191 7,  by 
the  following:^ 

'  The  Statist,  December  i,  1917,  p.  1121. 
*  The  Economist,  November  17,  1917,  p.  807. 
'  Board  of  Trade  Journal,  April  19,  1917,  p.  112. 
-•  Ibid.,  August  27,,  1917,  p.  395. 


I30  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

Wheat  and  Rye  Oats  Barley 

For  Delivery                per  Quarter  of  per  Quarter  of  per  Quarter  of 

504  Pounds  336  Pounds  448  Pounds 
s.     d.  s.     d.  s.     d. 
Before  1st  December,  19 1 7             73     6  44     3  62     9 
In  December,  1917,  or  Jan- 
uary, 1918 74     6  45     3  62     9 

In  January,  1918,  or  March 

1918 75     6  46     3  62     9 

In  Aprilor  May,  1918.  .  .  .              76     9  47     3  62     9 

On  or  after  1st  June,  1918.              77     9  48     6  62     9 

The  order  contains  certain  provisions  permitting  additions 
to  these  prices;  thus  where  oats  are  bought  by  a  miller  specific- 
ally for  the  manufacture  of  oatmeal,  rolled  oats  or  flaked 
oats,  3s.  per  quarter  may  be  added  to  the  maximum  price. 
In  the  case  of  damaged  wheat,  rye,  barley  or  improperly 
cleaned  oats,  certain  deductions  are  allowed. 

A  number  of  flour  and  bread  orders  were  issued  before  the 
establishment  of  a  standard  price  for  bread  and  flour  in  191 7. 

The  orders  fixed  the  percentages  of  flour  that  could  be  ex- 
tracted from  wheat  of  various  origins  and  qualities,  prohibited 
the  use  of  wheat  in  the  manufacture  of  beer  and  dealt  with 
the  various  conditions  on  which  bread  might  be  manufactured 
and  sold.'  On  April  30,  191 7,  the  Food  Controller  took  over 
all  flour  mills  in  the  United  Kingdom  which  used  any  wheat 
in  the  making  of  flour,  except  mills  the  output  capacity  of 
which  was  less  than  5  sacks  of  flour  per  hour.  The  effect  of 
this  order  was  that  the  mills  passed  into  the  possession  of  the 
Food  Controller,  the  work  in  them  to  be  carried  on  in  accord- 
ance with  his  directions. 

The  Flour  and  Bread  Order,  1917,  dated  September  17, 
established  the  following  maximum  retail  prices  for  bread 
and  flour: 

Bread 

Per  4  pound  loaf 9d. 

Per  2  pound  loaf 4^d. 

Per  I  pound  loaf 2  Jd. 

Flour 

Sack  of  280  pounds,  or  half  sack per  sack  50s. 

7  pounds  or  more,  but  under  half  sack,  per  14  pounds 2s.  8d. 

Per  quarters  (3^  pounds) 8^d. 

Per  half  quarters 4id. 

Per  I  pound 2^6.. 

Self-raising  flour  per  pound 2,2^- 

'  Great  Britain  Statutory  Rules  and  Orders,  1917,  No.  377,  or  Board  of  Trade 
Journal,  April  26,  1917. 


GREAT    BRITAIN  I3I 

To  enable  the  retailer  to  sell  to  the  public  at  the  retail  prices 
named,  wholesale  prices  had  been  fixed  for  flour.  On  and 
after  September  17  wheat  meal  and  flour  manufactured  in 
the  United  Kingdom  was  sold  at  44s.  3d.  per  sack  of  280 
pounds  at  the  mill  door.  Imported  flour  was  to  be  sold  at  a 
higher  price  according  to  quality.  The  price  of  44s.  3d.  has 
been  fixed  with  a  view  of  allowing  the  retailer  a  reasonable 
and  not  more  than  a  reasonable  profit.' 

The  prices  established  by  the  government  mean  a  reduction 
of  20  to  25  per  cent  on  those  previously  charged.  The  yearly 
cost  to  the  Exchequer  of  thus  "subsidizing"  flour  and  bread 
is  about  £40,000,000.  The  Statist  condemns  the  arrange- 
ment by  means  of  which  the  government  "dipped  into  the 
taxpayer's  pocket  with  one  hand  and  with  the  other  presented 
him  with  a  4  pound  loaf  for  9d."'  On  the  other  hand,  the 
Economist,  while  admitting  that  the  subsidized  loaf  is  open  to 
serious  objections,  supports  Lord  Rhondda  in  his  claim  that 
"it  is  the  best  expedient  in  the  present  circumstances."^ 

The  Oats  and  Maize  Products  (Retail  Prices)  Order,  191 7, 
dated  May  9,  191 7  (No.  444)  fixed  maximum  retail  prices  of 
4d.  per  pound  for  maize  flour,  maize  meal  and  other  like  prod- 
ucts, and  of  5|d.  per  pound  for  oatmeal,  rolled  oats  and 
flaked  oats.^  This  order  was  superseded  by  the  Oats  and 
Maize  Products  (Retail  Prices)  Order,  No.  2,  191 7,  dated 
May  23,  191 7  (No.  482),  which  reduced  the  maximum  prices, 
from  June  18,  for  maize  flour,  maize  flakes,  hominy,  etc.  to 
3^d.  per  pound  and  for  oatmeal,  rolled  oats,  flaked  oats  to 
4^d.  per  pound  in  Scotland  and  5d.  elsewhere  in  the  United 
Kingdom.^ 

Meat 

In  August,  1914,  an  act  was  passed  in  Queensland  giving 
the  Queensland  Government  full  control  over  the  meat  sup- 
plies of  the  state  for  imperial  purposes.    Early  in  April,  191 5, 

1  Labc'ir  Gazette,  September,  19 1 7,  p.  318. 

^  The  Statist,  December  i,  1917,  p.  1120. 

'  Tlie  Ecoftomist,  July  28,  1917,  p.  116. 

*  Defense  of  the  Realm  Manual,  May  31,  1917. 

^Jbid.,  see  also  Labour  Gazette,  June,  1917,  p.  201. 


1-1,2  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

a  similar  law  was  passed  in  New  South  Wales.     In  February, 
1915,  the  Australian  and  New  Zealand  Governments  agreed 
to  buy  on  l)ehalf  of  the  British  Government  all  the  beef, 
mutton  and  lamb  available  for  export.     F.  o.  b.  prices  were 
amicably  arranged  in  all  states  and  the  whole  exportable  sup- 
ply was  shipped.'    The  great  difficulty  as  to  the  imported  meat 
supply  throughout  the  war  had  been  the  shortage  of  shipping, 
to  overcome  which  systematic  shipping  arrangements  were 
made  by  the  British  Government.    The  method  adopted  by 
the  government  for  distributing  Australian  meat  among  the 
civilian  population  was  to  resell  it  to  firms  who  "formerly 
received   the  Australian  supplies."     These  were  selling  the 
meat  on  commission  and  were  bound  to  sell  it  "in  the  usual 
manner,"  so  that  "as  far  as  possible  it  should  pass  through 
the  usual  channels  and  in  the  usual  quantities."     In  case  of 
supplies  running  short  the  available  amount  was  "pro  rata." 
"The  distributors  were  held  bound  to  sell  only  to  bona  fide 
retailers  in  the  old  proportion."     This  scheme  was  similar 
in  its  essential  characteristics  to  that  adopted  for  the  dis- 
tribution  of  sugar  and   was   open   to   the  same  objections. 
For  two  years  unusual  conditions  had  been  confronting  the 
country,  a  redistribution  of  population  took  place  and  yet 
the  government  imposed  on  dealers  the  sale  of  meat  in  the 
"old    proportions."  2     In   no   case   were    the   wholesale   dis- 
tributors allowed  to  add  more  than  |d.  per  pound  to  the  price 
which  they  paid  to  the  selling  agents.    No  price  was  fixed 
for   retailers.      The   Board   of  Trade   Committee  on    Prices 
thought  that  the  wholesale  selling  policy  probably  was  suffi- 
cient to  secure  a  general  check  on  inflation,  the  instructions 
to  the  agents  being  that  they  should  aim  at  steady  and  moder- 
ate prices.^ 

Part  II  of  the  Meat  (Sales)  Order,  1917,  which  came  into 
force  on  June  4,  191 7,  was  directed  towards  securing  the 
elimination  of  jobbing  transactions  in  the  sales  of  dead  meat 
and   towards   limiting  the   salesmen's   profits.     A  salesman 

I  ^^P?""*  (interim)  of  the  committee  on  prices.    Cd.  pp.  9-10. 
L.  Cannan,  m  the  Economic  Journal,  December,  1916 
Interim  Report  on  Prices,  p.  11. 


GREAT    BRITAIN  I33 

selling  a  carcass,  side  or  quarter  could  only  charge  3d.  a  stone 
above  the  price  at  which  he  bought  (id.  additional  if  carcass  is 
cut  into  smaller  joints).' 

By  the  Meat  (Maximum  Prices)  Order,  191 7,  dated  August 
29,2  schedules  for  maximum  dead  meat  prices  as  from  Septem- 
ber 3  were  fixed.  The  beef  prices  corresponded  to,  and  were 
based  upon  the  maximum  prices  for  live  hundredweight  for 
cattle  purchased  by  the  army : 

SCHEDULE  OF  MAXIMUM  WHOLESALE  MEAT  PRICES ^ 

Beef  and  Veal  Mutton  and  Lamb  Pork 

Price  per  Ton  Price  per  Stone         Price  per  Stone 

Home       Imported  Home  Home 

Killed         Hind-  Killed      Imported     Killed      Imported 
1917                  Carcass     quarters 

s.  d.  s.  d.  s.  d.  s.  d.  s.  d.  s.  d. 

September 88  84  88  78  96  86 

October 84  80  88  78  96  86 

November 80  78  88  78  96  86 

December 80  78  80  78  96  86 

1918 

January 74  70  80  78  96  18 

The  retail  butcher  could  not  sell  meat  over  the  counter  at 
prices  which  in  the  aggregate  exceeded  the  price  paid  by  him 
by  more  than  2|d.  per  pound,  or  20  per  cent,  whichever  was 
the  less.  Out  of  this  difference  the  retailer  had  to  pay  all  his 
expenses  of  business.  Furthermore,  the  local  food  control  com- 
mittee was  empowered  to  fix  schedules  of  maximum  retail 
prices  for  the  various  joints.  These  schedules  varied  from 
district  to  district,  according  to  local  conditions.^ 

An  official  statement  issued  on  July  20,  1917,  announced 
that  in  agreement  with  the  Army  Council  and  the  Agricultural 
Departments  of  England,  Scotland  and  Ireland,  Lord 
Rhondda  had  decided  that  the  following  should  be  the  maxi- 
mum prices  for  live  cattle  for  the  Army:  September,  74s.  per 
live  hundredweight,  October,  72s.,  November  and  December, 
67s.,  January  6os.^  As  shown  above,  maximum  prices  were 
fixed  on  a  corresponding  basis  for  civilian  population  and  steps 

^  Board  of  Trade  Journal,  June  7,  1917,  pp.  532-533,  or  Statutory   Rules  and 
Orders,  1917,  No.  520. 

^  Board  of  Trade  Journal.  September  6,  19 17,  p.  505. 

^  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  November,  1917,  p.  lOI. 

*  Liberal  Magazine,  August,  1917,  p.  363. 


134  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

were  taken  to  control  the  profits  of  butchers  and  others  in 
such  a  manner  as  to  ensure  that  the  benefit  of  the  reduced 
prices  would  accrue  to  the  consumer.  The  fixing  of  maximum 
dead  weight  prices  for  cattle  limited  the  profits  of  the  farmer 
and  of  the  cattle  buyer,  and  the  fall  in  wholesale  price  at  the 
end  of  1 91 7  compared  with  July  of  the  same  year  was  19 
per  cent  in  the  case  of  mutton  and  17  per  cent  in  the  case  of 
beef.' 

Fearing  that  the  new  scale  of  fixed  prices  might  lead  to  a 
reduction  in  the  supply,  the  Food  Controller  reduced  the  cost 
of  feeding  stuff's  to  the  farmer,  and  by  an  order  of  November 
I  substantial  reductions  were  efifected  in  linseed  and  other 
kinds  of  cake,  milling  offals  and  various  cattle  foods. ^  This, 
however,  helped  matters  very  little. 

An  anomalous  situation  with  regard  to  meat  arose  at  the 
end  of  191 7  owing  to  high  prices  of  live  stock  as  compared 
with  fixed  maximum  prices  for  meat.  The  Food  Controller 
issued  an  interim  order,  limiting  the  prices  which  could  be 
paid  for  live  stock.'' 

The  efi^ect  of  price  fixing  in  the  case  of  meat  is  not  easy  to 
follow.  While  one  can  readily  ascertain  and,  if  necessary, 
limit  the  number  of  cattle,  sheep  and  pigs  slaughtered,  the 
more  important  thing  to  know  is  the  rate  of  breeding  to 
replace  the  numbers  slaughtered.  If  farmers  reduce  the  num- 
ber of  calves  bred,  it  takes  time  before  the  fact  becomes  ap- 
parent, and  any  legislation  which  leads  to  such  results  is  harm- 
ful from  the  standpoint  of  future  supplies.  Mr.  Prothero  has 
been  all  along  opposed  to  the  reduction  of  the  price  of  meat 
from  67s.  to  60s.  on  January  i,  1918.  In  his  words,  "it  put  a 
premium  on  grass  as  the  cheapest  form  of  cattle  feeding;  it 
penalized  stall  feeding  on  arable  farms,  and  so  tended  to 
diminish  the  supply  of  manure,  without  which  it  was  impos- 
sible to  carry  on  arable  farming  with  success."^  A  new  order 
left  the  price  of  cattle  at  67s.  per  live  hundredweight  during 

'  The  Statist,  December  i,  1917,  p.  1120. 

'  Ibid.,  p.  1 120. 

^  Board  of  Trade  Journal,  December  27,  191 7,  pp.  664-65. 

■•  The  Economist,  October  20,  1917,  p.  564. 


GREAT    BRITAIN  1 35 

the  first  six  months  of  191 8,  the  reduction  to  60s.  to  take 
efifect  on  July  i. 

In  view  of  the  excessive  slaughter  of  calves,  the  Food 
Controller  issued  the  Live  Stock  (Restriction  of  Slaughter) 
Order,  which  forbade  the  slaughter  of  heifer  calves  after 
January  i,  1918,  and  of  male  calves  after  March  15,  1918. 
The  order  also  prohibited  the  sale  of  lamb  (other  than  im- 
ported lamb)  between  February  i,  191 8,  and  June  15,  191 8, 
and  the  slaughter  of  in-pigs  sows,  in-lamb  ewes,  in-calf  cows 
or  in-calf  heifers  as  from  December  15,  191 7. 

The  Meat  (Retailers'  Restriction)  Order,  1918,  issued  on 
January  17,  1918,  provided  that  a  retail  butcher  could  not  in 
any  week  purchase  a  greater  number  of  cattle  or  quantity  of 
meat  than  the  number  or  quantity  prescribed  by  the  Food 
Controller.  The  next  step  was  strict  rationing  of  consumers, 
to  which  it  obviously  had  to  come. 

Bacon,  Ham  and  Lard 

The  Bacon,  Ham  and  Lard  (Maximum  Prices)  Order,  191 7, 
dated  August  30,  fixed  maximum  producers'  and  importers' 
prices.  In  connection  therewith,  it  was  pointed  out  that  the 
importers'  prices  were  mainly  determined  by  the  market  prices 
ruling  in  foreign  countries,  over  which  the  Food  Controller  has 
no  control,  and  that  they  must  be  maintained  at  such  a  figure 
as  will  ensure  the  regular  shipment  to  Great  Britain  of  ade- 
quate supplies.^  One  day  previous  to  the  issue  of  this  order, 
the  importation,  except  under  license,  of  bacon,  hams  and  lard 
was  prohibited.  The  object  of  this  step  was  to  enable  the 
government  to  take  over  the  whole  import  of  these  articles, 
and  to  concentrate  the  purchase  of  them  in  various  countries 
in  a  single  organization.  One  of  the  immediate  actions  taken 
was  the  establishment  in  the  United  States  of  a  single  buying 
agency,  analogous  to  the  Wheat  Export  Company.  It  was 
provided  that  the  goods  imported  on  behalf  of  the  Ministry  of 
Food  should  be  distributed  through  the  ordinary  channels  on 
fixed  terms  as  to  commission  and  profits.'^ 

'  Labour  Gazette,  September,  1917,  p.  318. 

^  Board  of  Trade  Journal,  September  6,  1917,  p.  505. 

10 


136  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

Butter 
The  Butter  (Maximum   Prices)   Order  dated  August  31, 

191 7,  established  from  September  3,  191 7,  maximum  whole- 
sale prices  for  butters  of  various  kinds,  and  also  provided 
that  after  September  10  no  person  should  retail  butter  at 
more  than  2|d.  per  pound  in  excess  of  the  actual  cost  to  him; 
an  additional  ^d.  per  pound  was  allowed  for  credit  or  for 
deli\'ery.  Food  control  committees  were  empowered  to 
prescribe  from  time  to  time  a  scale  of  maximum  prices,  in 
accordance  with  the  general  directions  of  the  Food  Controller.^ 
This  order  applied  to  home  made  butter,  leaving  imported 
butter  out  of  control.  The  plan  was  found  unworkable.  On 
September  20,  first  hand  maximum  prices  of  butter  have 
been  fixed  for  or  on  behalf  of  the  importer  or  maker  of  French 
butter  at  238s.  per  hundredweight  for  French  Paris  (unsalted).^ 
At  about  the  same  time  the  Food  Controller  announced  that  he 
had  appointed  an  advisory  committee  to  consider  the  control 
of  purchase  and  distribution  of  butter  supplies  and  that  the 
committee  was  engaged  in  working  out  the  details  of  a  scheme 
for  the  complete  control  of  the  imports  of  butter. 

Danish  butter  was  selling  at  that  time  at  a  much  higher 
price  than  the  domestic  product.  Two  orders  were  issued  at 
the  beginning  of  November,  191 7,  one  making  certain  altera- 
tions in  the  previous  Butter  Order  and  the  other  fixing  the 
first  hand  price  of  both  Danish  and  Dutch  butter  (at  229s. 
per  hundredweight)  as  well  as  the  price  of  blended  butter 
from  English  factories.^  The  purpose  of  these  orders  was  to 
bring  imported  and  home  produced  butter  to  approximately 
the  same  level  of  prices.  The  importation  of  Dutch  butter 
ceased.    Lord  Strachie  in  a  letter  to  the  Times  of  January  9, 

1918,  pointed  out  that  Lord  Rhondda  has  fixed  the  price  at 
which  butter  imported  from  Holland  may  be  sold  in  the 
United  Kingdom  at  229s.  per  hundredweight,  while  the  cost 
of   producing   such    butter   is   445s.      "It   is   unnecessary," 

^Labour  Gazette,  September,  1917,  p.  318. 

^  Board  of  Trade  Journal,  Septemlser  27,  1917,  p.  676. 

^  Ibid.,  November  8,  1917,  p.  295. 


GREAT    BRITAIN  I37 

writes  the  Spectator,  "to  look  any  further  for  an  explanation 
of  the  stoppage  of  supply  of  Dutch  butter.  A  similar  con- 
sideration applies  to  Danish  butter."'  Maximum  prices 
fixed  for  some  of  the  other  kinds  of  butter  were  as  follows: 
Australian,  220s.,  New  Zealand,  224s,  Argentina,  220s., 
British  made,  230s.-  The  government  expected  that  even- 
tually most  kinds  of  butter  would  be  sold  to  retail  for  2s. 
3d.  to  2s.  5d.  per  pound,  without  any  loss  to  the  Exchequer. 

Cheese 

Cheese  imported  from  the  United  States,  Canada,  Australia 
and  New  Zealand  was  taken  over  by  the  Food  Controller  on 
May  29,  1917  (Cheese  Requisition  Order,  1917,  No.  510).^ 
Prices  fixed  for  this  cheese  were  such  as  to  enable  the  retailers 
to  resell  at  is.  4d.  per  pound.  The  wholesale  price  of  the 
British  made  cheese  was  fixed  by  an  order  dated  August  31, 
191 7.  This  order  also  regulated  prices  to  be  charged  by 
others  than  makers.'*  The  order  was  less  than  a  month  old, 
when  the  Food  Controller  announced  that  in  view  of  the 
forthcoming  advance  in  the  controlled  price  of  milk,  and  in 
order  to  encourage  the  making  of  cheese  so  far  as  any  sur- 
plus supply  of  milk  may  be  available,  the  maximum  first 
hand  price  of  all  whole  milk  cheese  would  be  raised  to  137s. 
per  hundredweight.^  The  announcement  enumerated  certain 
exceptions  to  this  price  and  then  stated  that  on  and  after 
November  i,  191 7,  the  maximum  first  hand  price  of  whole 
milk  cheese,  with  the  above  exceptions,  would  be  not  less  than 
142s.  per  hundredweight. 

By  an  order  dated  December  8,  191 7,  the  Food  Controller 
applied  the  provisions  of  the  British  Cheese  Order  to  Dutch 
cheese.  It  fixed  the  maximum  first  hand  prices  chargeable  by 
an  importer,  on  full  cream  cheddar  shapes  at  lOOs.,  with  a 
proportionate  decline  on  poorer  grades.® 

'  The  Spectator,  January  12,  1918,  p.  31. 

*  Commerce  Reports,  November  6,  191 7,  p.  497. 

^  The  Defense  of  the  Realm  Manual,  May  31,  1917,  p.  308. 

*  Board  of  Trade  Journal,  September  6,  1917,  p.  506. 
^  Ibid.,  September  27,  1917,  pp.  676-677. 

*  Chamber  of  Commerce  Journal,  January,  1918,  p.  11. 


138  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

Tea 

On  March  16,  191 7,  the  Food  Controller  announced  that 
an  arrangement  had  been  made  with  the  various  tea  associa- 
tions, representing  importers,  brokers  and  distributors,  that 
on  and  after  May  i  tea  shall  be  sold  retail  at  2s.  2d.  and  2s.  4d. 
(52.7  and  56.8  cents)  per  pound  and  upward.  To  insure  a 
reasonable  supply  at  the  lower  price,  40  per  cent  of  the  im- 
ports from  India  and  Ceylon  were  to  be  allocated  to  the  trade 
by  the  importers  for  this  purpose.'  The  popular  retail  price 
of  tea  up  to  November,  1916,  advanced  8d.  per  pound,  of 
which  7d.  per  pound  was  increase  in  duty  and  only  id.  per 
pound  was  an  advance  due  to  other  causes.  In  November, 
1916,  the  price  was  2s.  as  compared  with  is.  4d.  in  1914.  A 
number  of  reasons  brought  about  a  rapid  rise  in  price  in  the 
early  part  of  191 7.  Some  of  these  reasons  were  (i)  market 
rumors  that  the  Food  Controller  was  going  to  take  action 
with  regard  to  tea,  (2)  exceptionally  large  demand  on  the  part 
of  consumers  who  anticipated  shortage,  (3)  curtailment  of 
supplies,  first  by  the  prohibition  of  the  importation  of  tea  from 
China  and  Java,  and,  second,  by  restriction  of  space  allotted 
to  tea  shipments  from  Calcutta  and  Colombo. ^ 

In  July  the  scheme  of  distribution  was  so  amended  that  by 
arrangement  with  the  trade  30  per  cent  of  the  total  imports 
of  tea  from  India  and  Ceylon  was  allocated  to  be  sold  retail 
at  2s.  4d.,  per  pound,  35  per  cent  at  3s.  8d.,  and  25  per  cent  at 
3s.  per  pound,  the  balance  of  10  per  cent  to  consist  of  fine  teas 
at  above  3s.  per  pound. ^ 

At  the  time,  the  position  of  the  tea  supply  attracted  some 
attention  in  the  press,  and  various  statements,  some  of  an 
alarming  nature,  appeared.  In  view  of  this  the  Food  Con- 
troller reassured  the  public.  According  to  him,  though  the 
importation  of  China  and  Java  teas  had  been  stopped,  this 
has  been  more  than  balanced  by  the  prohibition  of  exports 
except  under  license.     The  difficulty  in  providing  tonnage 

»  Monthly  Remew  of  the  U.  S.  Bureau  of  Labor  Statistics,  June,  191 7,  p.  940. 

^  The  Economist,  February  16,  1918,  p.  268. 

3  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  November,  1917,  p.  98. 


GREAT    BRITAIN  139 

has  been  met  and  adequate  imports  were  insured.  Economy 
in  the  use  of  tea,  as  in  the  case  of  all  foodstuffs,  has  been  urged. ^ 

There  seems  to  have  been  a  great  deal  of  confusion  in  the 
tea  trade,  the  blame  for  which  the  Cooperative  Wholesale 
Society  placed  upon  the  Tea  Advisory  Committee;  it  bitterly 
attacked  the  composition  of  this  committee  and  suggested 
that  under  state  purchase  and  distribution  a  tea  director  be 
appointed  with  compulsory  powers: 

(i)  To  acquire  all  stocks  of  tea  in  the  country  in  the  hands 
of  growers  and  importers  and  all  cargoes  afloat  at  a  reasonable 
profit  commensurate  with  capital,  expenditure,  etc. 

(2)  To  distribute  supplies  as  far  as  possible  through  exist- 
ing distributive  channels. 

(3)  To  ensure  the  public  their  supplies  of  tea  at  a  minimum 
profit. 

While  the  discussion  was  going  on,  the  finer  teas  which  the 
order  permitted  to  be  sold  at  above  3s.  per  pound  soared 
higher  and  higher  in  price,  and,  what  seemed  puzzling  to  the 
public,  the  controlled  tea,  the  90  per  cent  from  India  and  Cey- 
lon which  had  to  be  offered  for  sale  at  maximum  prices,  seemed 
to  have  practically  disappeared ;  all  that  the  housewives  were 
able  to  buy  were  the  choicer  teas  at  extravagant  prices.^ 

By  an  order  dated  October  17  it  was  provided  that  no  tea 
should  be  sold  after  October  31,  1917,  at  a  price  exceeding  4s. 
per  pound. -^  Further  regulations  were  made  as  to  the  prices 
of  tea  on  December  14.  The  effect  of  this  and  of  the  previous 
order  may  be  summarized  as  follows: 

Maximum  prices  at  which  teas  could  be  sold  until  December 
30,  191 7:  Class  A,  2s.  4d.  per  pound;  class  B,  2s.  8d.  to  3s. 
per  pound;  class  C,  3s.  to  3s.  4d.  per  pound;  class  D,  4s.  per 
pound ;  uncontrolled  4s.  per  pound. 

On  and  after  December  31  the  maximum  prices  were  fixed 
to  be:  Class  A,  2s.  4d.  per  pound;  class  B,  2s.  8d.  to  3s.  per 
pound;  class  C,  3s.  to  3s.  4d.  per  pound;  class  D,  3s.  8d.  per 
pound,  and  uncontrolled,  2s.  8d.  per  pound. 

'  Labour  Gazette,  September,  1917,  p.  319. 

^  The  Economist,  November  3,  19 17,  p.  726. 

^  Board  of  Trade  Journal,  October  25,  1917,  p.  185. 


140  PRICES   AND   PRICE   CONTROL  DURING  THE  WAR 

Beans,  Peas  and  Pulse 

By  the  Beans,  Peas  and  Pulse  (Requisition)  Order,  191 7, 
dated  May  16,  1917  (No.  457),  the  Food  Controller  took  over 
from  the  original  consignees  all  beans,  peas  and  pulse  suitable 
for  human  food  which  had  arrived  or  was  to  arrive  in  the  United 
Kingdom.'  The  order  was  supplemented  by  a  Retail  Prices 
Order  on  May  29,  1917  (Order  No.  571),  which  fixed  three 
schedules  of  maximum  retail  prices  for  various  kinds  of  beans: 
one  schedule,  the  highest,  to  apply  until  June  30,  1917,  one, 
during  July,  1917,  and  one,  on  and  after  August,  1917.  The 
prices  for  the  third  period  were  fixed  as  follows :  large  butter 
beans,  8d.  per  pound;  white  haricot  beans,  8d. ;  colored  haricot 
beans,  5|d.;  large  manufactured  lentils,  8d.;  small  manufac- 
tured lentils,  7d.;  blue  and  green  peas,  9d.;  yellow  split  peas, 
6d.^  The  sale  of  peas  in  packages  was  authorized  under 
certain  conditions. 

A  couple  of  weeks  before  the  issue  of  the  first  of  these  two 
orders  the  Food  Controller  took  over  by  a  special  order  all 
"Burmah"  peas  and  beans  arriving  in  Great  Britain.^  The 
price  to  be  paid  was  fixed  at  £37  per  ton  for  handpicked  white 
beans,  prices  for  other  varieties  being  at  corresponding  levels. 
Before  this  order  market  prices  ranged  around  £80  per  ton. 
The  commandeered  beans  were  to  be  sold  at  a  retail  price  of 
6d.  per  pound,  which  was  about  half  the  price  existing  before 
the  Food  Controller's  intervention.  The  classification  "Bur- 
mah"  covers  various  types  of  beans  imported  from  Egypt, 
Spain,  Japan  and  China,  including  the  Soya  bean.  At  the 
beginning  of  July,  the  Food  Controller  authorized,  until 
August  15,  sales  and  purchases  of  beans,  peas  and  pulse 
contracted  before  May  30  at  prices  exceeding  those  permitted 
by  the  Order  of  May  29.^ 

^  Defense  of  the  Realm  Manual,  May  31,  1917,  p.  261. 

*  Ibid.,  p.  262;  or  Board  of  Trade  Journal,  May  31,  1917,  p.  472. 
'  The  Economist,  May  5,  1917,  p.  774. 

*  Board  of  Trade  Journal,  July  12,  1917,  p.  82. 


GREAT    BRITAIN  I4I 

Miscellaneous 

An  order,  passed  In  March,  19 17,  and  directed  against  the 
manufacture  of  "extravagant  sweets,''  enforced  a  maximum 
retail  price  of  3d.  an  ounce  for  chocolates  and  2d.  an  ounce  for 
other  sweets.^ 

Jam  (Prices)  Order,  191 7,  dated  August  15,  fixed  maximum 
wholesale  and  retail  prices  for  various  kinds  of  jam  and  jelly. 
The  maximum  retail  price  per  pound  ranged  from  9d.  for  plum 
and  apple  to  is.  for  strawberry  and  five  other  kinds. - 

Previous  to  the  issuance  of  this  order  the  Stone  Fruit  (Jam 
Manufacturers'  Prices)  Order  and  the  Raspberries  (Manu- 
facturers' Prices)  Order  fixed  maximum  prices  at  which  jam 
manufacturers  could  buy  home  grown  plums,  damsons,  green 
gages  and  raspberries.^ 

An  order  which  came  Into  force  on  December  10,  191 7, 
fixed  the  maximum  retail  price  of  roasted  or  ground  coffee  at 
Is.  6d.  per  pound  and  that  of  raw  coffee  at  is.  4d.  If  a  trader 
had  coffee  on  offer  at  these  rates  he  could  sell  better  qualities 
of  roasted  or  ground  coffee  at  any  price  not  exceeding  2s.  6d. 
per  pound,  and  of  raw  coffee  at  any  price  not  exceeding  2s.  4d.* 

An  order  Issued  towards  the  end  of  December,  191 7,  limited 
the  retail  price  of  home  grown  onions  to  3d.  per  pound  and  pro- 
hibited retail  sales  to  one  customer  of  more  than  7  pounds  In 
one  week.     It  also  fixed  growers'  and  wholesale  prices.^ 

By  an  order  in  force  on  January  14,  1918,  the  maximum 
price  of  wild  rabbits  was  fixed  at  2s.  If  sold  with  the  skin,  is. 
9d.  if  sold  without  the  skin,  and  lod.  a  pound  for  any  part  of  a 
rabbit.* 

The  Food  Controller  fixed  also  maximum  prices  on  fish. 

1  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  March,  1917,  p.  403. 

2  Labour  Gazette,  September,  1917,  p.  318. 

3  Ibid.,  July  1917,  p.  238. 

*  Chamber  of  Commerce  Journal,  January,  1918,  p.  11. 
^  Ibid.,  February,  1918,  p.  38. 


CHAPTER   VIII 
Governmental  Control  and  Price  Fixing 

Coal 

From  the  earliest  stages  of  the  war  questions  concerning  the 
prices  of  coal,  the  profits  of  coal  operators  and  the  wages  of 
miners  received  a  great  deal  of  attention.  Because  of  the  sharp 
rise  in  prices  and  the  shortage  of  supply,  the  Board  of  Trade 
appointed  a  committee  to  investigate  the  conditions  in  the 
retail  coal  trade.  This  committee  reported  the  results  of  its 
investigation  in  April,  1915.  It  studied  mainly  the  conditions 
in  London,  and  found  that  the  actual  increase  in  prices  for 
best  coal  between  June  16,  1914,  and  February  17,  191 5, 
amounted  to  9s.  per  ton,  the  price  having  risen  from  26s.  to 
35s.;  the  cheaper  kinds  rose  more  rapidly,  "stove  nuts"  hav- 
ing increased  in  price  from  20s.  to  34s.  The  chief  cause  of  the 
increase  was  a  reduction  of  supply  due  to  the  fact  that  some 
130,000  miners  had  joined  the  colors.'  Four  other  causes  helped 
to  intensify  the  scarcity  of  coal  in  London:  (i)  decrease  in 
sea  borne  supplies;  (2)  congestion  on  the  railways  and  shortage 
of  wagons  arising  especially  from  military  requirements;  (3) 
lack  of  storage  accommodation  in  London,  except  among 
wealthy  people;  (4)  excessive  demand  at  certain  periods  due 
to  "panic"  orders.  The  committee  found  that  the  cost  of 
production  at  the  mine  had  increased  only  slightly,  by  less 
than  IS.  (24.3  cents).  The  wages  of  miners  and  railway  rates 
had  not  changed,  and  the  increased  cost  of  wagon  hire,  horses, 
fodder,  etc.,  as  well  as  increased  wages  of  carters  and  loaders 
were  found  to  amount  to  no  more  than  2s.  per  ton.  The  total 
rise  in  the  cost  of  production  and  distribution  was  therefore 
at  most  3s.  per  ton,  while  the  price  to  the  consumer  in  London 

*  Report  (interim)  of  departmental  committee  to  inquire  into  the  causes  of  the 
present  rise  in  the  retail  prices  of  coal  sold  for  domestic  use  (Cd.  7866).  London, 
1915;  see  also  The  Economist,  April  10,  1915,  p.  705. 

142 


GREAT    BRITAIN  1 43 

had  risen  above  normal  winter  rates  by  an  amount  varying 
from  7s.  to  us. 

The  committee  did  not  attribute  high  prices  to  definitely 
constituted  "rings"  or  close  corporations  in  the  coal  trade.' 
However,  it  called  attention  to  the  fact  that  there  were  oppor- 
tunities for  "conferences"  on  the  London  coal  exchange  and 
that  the  advertised  "public  prices"  were  fixed  by  a  few  lead- 
ing firms.  Prices  charged,  according  to  the  committee's 
report,  included  a  large  surplus  above  ordinary  profits,  after 
making  due  allowance  for  increased  cost  of  production  and 
distribution. 

The  committee  recommended  (i)  restriction  of  exports  to 
neutral  countries,  (2)  accumulation  of  reserves  in  or  near  Lon- 
don, (3)  reduction  of  freight  rates  on  interned  steamers,  (4) 
assumption  of  control  of  the  output  of  collieries  by  the  govern- 
ment, should  the  prices  not  return  shortly  to  a  reasonable  level. 
The  investigation  left  an  impression  on  the  committee  that 
the  conduct  of  an  industry  on  which  such  great  national  inter- 
ests depend  can  not  be  left  safely  in  time  of  a  crisis  to  the 
working  of  an  unregulated  system  of  supply  and  demand. 

Acting  upon  one  of  the  recommendations  of  the  Coal  (Retail 
Prices)  Committee,  the  Board  of  Trade  prohibited  the  export 
of  coal  from  England  after  May  13,  191 5,  except  to  British 
colonies,  to  the  Allies  and  to  Portugal.  The  object  of  the  pro- 
hibition was  twofold:  (i)  to  relieve  the  shortage  of  supplies 
and  thereby  reduce  prices  and  (2)  to  prevent  British  coal  from 
reaching  enemies  via  neutral  countries.  A  committee  was 
appointed  to  supervise  the  coal  export  trade. 

On  February  23,  191 5,  the  Board  of  Trade  appointed  a 
committee  to  inquire  into  the  conditions  prevailing  in  the 
coal  mining  industry,  with  a  view  to  promoting  such  organiza- 
tion of  work  as  would  secure  the  necessary  production  of  coal 
during  the  war.  The  report  of  this  latter  committee  (Cd. 
7939)  appeared  a  couple  of  months  later  than  the  one  pre- 
sented by  the  Coal  (Retail  Prices)  Committee.  This  report 
corroborated  the  conclusions  reached  by  the  Board  of  Trade 

^  Labour  Gazette,  April,  1915,  p.  117. 


144  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

Committee  on  Employment,  namely,  that  indiscriminate 
recruiting  in  vital  industries,  such  as  coal  mining,  should  be 
called  to  a  halt.' 

The  committee  found  that  the  number  of  persons  from  coal 
mines  who  had  joined  His  Majesty's  forces  up  to  the  end  of 
February  was  191,170,  or  at  the  rate  of  27,310  persons  a 
month.  This  number  represented  17.1  per  cent  of  the  total 
number  of  persons  of  all  ages  employed  in  coal  mines  at  the 
beginning  of  the  war  (1,116,648);  but  the  proportion  of  per- 
sons who  left  between  the  ages  of  19  and  30,  i.e.  of  those  who 
were  most  fit  to  undertake  arduous  work,  was  estimated  approx- 
imately at  40  per  cent.^  There  has  been  a  certain  amount  of 
replenishment  of  labor  in  coal  mines  from  outside  sources,  but 
this  replenishment  did  not  make  good  the  loss  due  to  enlist- 
ment. Those  who  left  were  mostly  trained,  young  and  vigor- 
ous men;  those  who  took  their  places  were  workmen  of  an 
entirely  different  character.^ 

Enlistments  continued  into  191 6,  and  it  was  estimated  that 
by  the  end  of  September,  287,000,  or  more  than  25  per  cent 
of  the  labor  employed  in  the  collieries  at  the  outbreak  Of  the 
war,  had  joined  the  colors.^  Because  of  inflow  of  labor  from 
other  industries  and  reentry  of  men  returned  from  the  forces, 
the  actual  decline  in  the  number  of  miners  at  work  fell  be- 
tween August,  1914,  and  June,  1916,  by  13.7  per  cent.  The 
effect  of  the  decrease  in  the  number  of  miners  was  a  decline 
in  the  output  of  coal.     The  following  figures  tell  the  story: 

PRODUCTION   OF   COAL^  Million 

Tons 

January  to  December,  1913 287  .0 

January-  to  June,  1914 140.0 

July  to  December,  1914 125.6 

January'  to  June,  1915 127.6 

July  to  December,  1915 126.6 

January  to  June,  1916 128  .3 

July  to  December,  1916 128  .  i 

January  to  June,  1917 126.4 

July  to  December,  1917 121 .3 

'  The  Economist,  June  12,  1915,  p.  1195. 

*  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  July,  1915,  P-  57- 
'  Board  of  Trade  Journal,  January  24,  1918,  p.  92. 

*  Labour  Gazette,  January  17,  1917. 

*  Board  of  Trade  Journal,  January  31,  1918,  p.  122. 


GREAT    BRITAIN  1 45 

On  June  i6,  191 6,  the  government  prohibited  all  recruiting 
from  miners  and  decided  further  that  all  miners  in  the  ranks 
of  home  service  units,  who  were  unfit  for  foreign  service, 
should  be  returned  to  the  mines.  ^ 

The  production  of  coal  declined  from  287,000  million  tons 
in  1913  to  257,700  million  tons  in  1917,  at  a  time  when  the 
country  because  of  governmental  requirements  needed  coal 
more  than  at  any  time  in  her  history.  The  domestic  sit- 
uation was  somewhat  relieved  by  restrictions  placed  on 
exports  of  coal.  These  restrictions  coupled  with  reduction  of 
tonnage  available  for  shipments  of  coal  led  to  a  decline  in 
export  of  coal  from  77  million  tons  in  1913,  to  42  million  tons 
in  1916  and  38  million  tons  in  1917;  the  balance  available  for 
home  consumption,  admiralty  and  bunkers  was  thus  210  mil- 
lion tons  in  1913,  214  million  tons  in  1916  and  207  million 
tons  in  191 7.- 

On  July  29,  191 5,  the  Price  of  Coal  (Limitation)  Act  (5  and 
6  Geo.  V,  ch.  75)  was  passed.  It  prescribed  that  the  price  of 
coal  at  the  pit's  mouth  should  not  exceed  by  more  than  4s.  per 
ton  (or  such  other  amount  as  the  board  might  order)  the  price 
of  the  same  description  of  coal  sold  in  similar  quantities  under 
similar  conditions  at  the  corresponding  date  during  the  twelve 
months  ended  June  30,  1914.  The  act  also  limited  the  charge 
for  transportation  from  the  pit's  mouth  on  trucks  owned  by 
the  mine  operator  to  50  per  cent  above  that  which  prevailed  at 
the  "commencement"  of  the  act. 

The  Board  of  Trade  authorized  an  increase  of  5s.  instead  of 
4s.  in  the  Forest  of  Dean  district  on  September  17,  1915.  An 
increase  of  6s.  6d.  instead  of  4s.  was  authorized  by  the  board 
in  the  Monmouthshire  and  South  Wales  district  on  July  13, 
19 1 6.  A  similar  increase  of  6s.  6d.  was  authorized  in  the 
Forest  of  Dean  district  and  the  191 5  order  was  rescinded  on 
October  18,  1916. 

'  Great  Britain.  Coal  Mining  Organization  Committee — third  general  report 
of  the  departmental  committee  appointed  to  inquire  into  the  conditions  prevailing 
in  the  coal  mining  industry  due  to  the  war.  London,  1916.  The  second  report 
of  the  committee  was  issued  in  December,  1915;  quoted  from  Monthly  Review  of 
the  Bureau  of  Labor  Statistics,  p.  534. 

'  Board  of  Trade  Jour/ial,  January  24,  1918,  p.  92. 


146  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

After  the  passage  of  the  Price  of  Coal  (Limitation)  Act, 
voluntary  arrangements  were  made  with  the  London  coal 
merchants  for  limiting  retail  prices  of  house  coal,  and  it  was 
suggested  to  local  authorities  throughout  the  country  that 
they  might  make  similar  voluntary  arrangements  with  the 
coal  merchants  in  their  districts.  The  leading  coal  merchants 
in  \-arious  important  centers  throughout  the  country  under- 
took to  limit  charges  added  by  them  to  the  cost  of  coal,  as 
delivered  to  the  merchants,  or  not  to  advance  prices  above 
an  agreed  level  without  first  consulting  with  the  municipal 
authorities.  In  London  a  definite  schedule  of  prices  for  sales 
of  coal  in  small  quantities  was  established,  and  the  London 
County  Council  required  this  schedule  to  be  kept  posted  in 
the  small  shops  where  coal  was  sold  in  penny  worths  and 
similar  small  quantities. '- 

In  order  to  assure  the  continuity  of  supplies  to  home  con- 
sumers a  Coal  Exports  Committee  was  created  in  May,  191 5; 
the  next  steps  were  the  setting  up  during  the  second  winter  of 
the  war  (December,  1915-January,  1916)  of  district  coal  and 
coke  supplies  committees  in  different  colliery  districts  and 
the  establishment  of  a  central  committee,  consisting  of  repre- 
sentatives of  the  Board  of  Trade,  the  Admiralty,  the  Home 
Office,  the  Ministry  of  Munitions,  the  Railway  Executive  Com- 
mittee, the  coal  mining  industry  and  the  coal  trade.  The 
functions  of  the  local  committees  were  to  arrange  for  the  most 
economical  system  of  distribution  and  in  particular  to  ensure 
adequate  supplies  to  the  war  industries,  while  the  central 
committee  was  entrusted  with  the  consideration  of  questions 
of  policy.  At  first  the  committees  w^ere  on  a  voluntary  basis, 
but  legal  difficulties  because  of  committees'  interference  with 
contracts  made  it  necessary  to  establish  the  system  on  a  com- 
pulsory basis. 2 

On  November  29,  191 6,  a  regulation  was  passed  under  the 
Defense  of  the  Realm  Act  giving  the  Board  of  Trade  power  to 
take  possession  of  any  coal  mines  where  it  appeared  to  them 

^  Report  finterim)  of  departmental  committee  on  prices,  Cd.  7866,  p.  7. 
^  Board  of  Trade  Journal,  January  24,  1918,  p.  93. 


GREAT    BRITAIN  I47 

expedient  "for  securing  the  public  safety  and  the  defense  of 
the  realm."  Because  of  a  wage  rate  dispute  this  regulation 
was  at  once  (December  i,  1916)  made  applicable  by  order  to 
the  South  Wales  coal  field  ;^  on  February  22  all  the  mines  in 
the  kingdom  came  under  control  of  the  Coal  Mines  Depart- 
ment,^  which  had  been  established  by  the  President  of  the 
Board  of  Trade.  A  Controller  of  Coal  Mines  (Mr.  Guy  Cal- 
throp)  was  appointed,  as  well  as  an  Advisory  Board,  consisting 
of  representatives  of  coal  owners  and  coal  miners. 

The  powers  given  to  the  Coal  Controller's  department  were 
very  comprehensive;  they  gave  him  full  control  over  the  pro- 
duction, distribution,  storage  and  consumption  of  coal,  includ- 
ing the  fixing  of  maximum  or  minimum  prices.  The  effect  of 
the  shortage  of  shipping  was  felt  in  the  early  part  of  191 7  in 
the  form  of  a  considerable  reduction  in  the  quantity  of  coal 
exported  and  a  serious  fall  in  export  prices.  In  order  to  deal 
with  the  position  as  regards  prices,  a  code  of  directions  as  to 
the  sale  of  coal  was  issued  by  the  Controller  of  Coal  Mines  on 
June  28,  1 91 7,  embodying  a  schedule  of  prices  of  coal  for 
exporting  or  bunkering.^  A  series  of  amendments  to  these 
directions  was  issued  on  October  12,  and  the  schedule  prices 
were  increased  by  2s.  6d.  per  ton,  except  as  regards  shipments 
to  France  and  Italy  ;^  the  latter  was  a  rather  unsatisfactory  ar- 
rangement. "The  scheme  for  the  supply  of  coal  to  France 
and  Italy  at  limited  coal  prices  and  rates  of  freight  has  been  to 
deprive  colliery  companies,  and  particularly  those  producing 
mainly  for  export,  of  their  private  commercial  character  and 
virtually  to  convert  them  into  a  part  of  the  state  domain." 

The  prices  ranged  from  30s.  to  33s.  per  ton,  f.  o.  b.,  for  the 
better  classes  of  large  steam  coals,  and  roughly  from  20s.  to 
23s.  per  ton  for  the  better  qualities  of  small  coals.  They  were 
graded  according  to  their  relative  economic  value,  and,  on  an 
average,  were  many  shillings  per  ton  higher  than  the  current 

^Liberal  Magazine,  December,  1916,  p.  573;  Board  of  Trade  Journal,  vol.  95, 
p.  717. 

*  The  Economist,  November  3,  1917,  p.  726;  Board  of  Trade  Journal    vol.  96, 
p.  880. 

'  Board  of  Trade  Journal,  January  31,  1918,  p.  121. 

*  The  Economist,  Novemtaer  3,  19 17,  p.  726. 


148  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

market  prices.  The  scheme  was  thus  vitally  different  from 
that  which  had  been  in  force  for  the  supply  of  coal  to  France 
since  June,  1916,  for  under  that  scheme  there  was  one  maxi- 
mum price  of  30s.  for  large  coals,  irrespective  of  their  relative 
qualities,  and  of  20s.  for  small  coals.  The  new  fixed  prices 
were  to  be  enforced  without  regard  to  current  market  condi- 
tions.' The  scheduled  prices  operated  as  fixed  prices  in  the 
case  of  shipments  to  France  and  Italy,  and  as  minima  in  the 
case  of  shipments  to  neutral  countries.  Contracts  entered 
into  prior  to  May  i,  191 7,  were  not  to  be  interfered  with,  and 
the  coals  supplied  to  the  Admiralty  were  excluded  from  the 
scheme. - 

The  price  of  coal  in  the  United  Kingdom  was  increased  by 
2s.  6d.  per  ton  at  the  pit's  mouth  in  October,  191 7,  in  order  to 
meet  the  cost  of  the  special  war  wage  of  is.  6d.  per  day  to 
adults  and  of  9d.  per  day  to  boys  under  16,  which  was  granted 
by  the  Coal  Controller.  But  according  to  this  new  arrange- 
ment the  coal  owners  who  were  supplying  the  home  market 
exclusively  were  able  to  realize  the  extra  2s.  6d.  on  the  whole 
of  their  outputs,  while  those  who  were  selling  to  France  and 
Italy  were  excluded  from  the  benefit  of  this  additional  amount. 
Because  of  this,  the  concession  granted  by  the  Board  of  Trade 
did  not  represent  more  than  is.  lod.  per  ton  when  applied  to 
the  total  production  of  the  coal  fields.  The  most  affected  col- 
lieries were  those  of  South  Wales  and  those  in  proximity  to 
Tyne  and  other  Northeast  ports.  The  war  wage  advance  of 
Is.  6d.  per  day  was  to  be  paid  to  all  workmen,  whether  they 
worked  or  not;  this  placed  a  heavier  burden  upon  those  col- 
lieries where  the  loss  of  working  time  through  tonnage  scarcity* 
was  the  greatest.^  The  government  increased  the  wages  of 
miners  and  passed  the  price  fixing  law  without  consulting  the 
colliery  owners. 

One  of  the  first  measures  taken  by  the  Controller  after  his 
appointment  was  the  preparation  of  a  scheme  of  compensa- 

1  The  Economist,  July  7,  191 7,  p.  11. 
"^  Ibid.,  July  14,  1917,  p.  45. 
'  Ibid.,  October  20,  1917. 


GREAT    BRITAIN  I49 

tion  to  the  owners  of  the  mines.  The  Mining  Association 
strongly  recommended  the  acceptance  of  the  control  agree- 
ment to  the  coal  owners,  but  so  many  owners  were  opposed  to 
the  scheme  that  it  was  decided  to  abandon  all  attempts  at  a 
voluntary  agreement.  On  October  25  Sir  Albert  Stanley 
introduced  in  the  House  of  Commons  a  bill  "to  confirm  and 
give  effect  to  a  certain  agreement  relating  to  the  compensation 
to  be  paid  in  respect  to  the  control  of  coal  mines  and  other 
matters  arising  out  of  such  control."  The  bill  was  passed  as 
the  Coal  Mines  Control  Agreement  (Confirmation)  Act.' 
One  of  the  main  features  of  the  agreement  was  the  surrender 
by  the  owners  of  95  per  cent  of  any  profits  in  excess  of  the 
"profits  standard"  (that  is,  the  average  profits  of  the  best 
two  out  of  the  three  years  before  the  war,  or  the  best  four 
years  out  of  six),  the  Controller  receiving  what  remained  after 
payment  of  excess  profits  duty  of  80  per  cent.  The  Controller 
on  the  other  hand,  guaranteed  the  prewar  profits  standard 
to  all  collieries,  subject  to  a  reduction  where  the  output  was 
reduced. 2 

Since  the  assumption  of  governmental  control  colliery  com- 
panies have  been  held  responsible  for  the  working  of  the  pits. 
When  in  October,  1917,  the  financial  arrangements  of  state 
control  were  disclosed,  it  became  apparent  that  many  of  the 
pits  had  been  working  at  a  loss. 

In  view  of  continuous  complaints  that  were  coming  in  as  to 
excessive  prices  charged  by  dealers  selling  coal  in  small  quanti- 
ties, the  Board  of  Trade  made  an  arrangement  with  wholesale 
merchants,  by  dint  of  which  they  agreed  to  refuse  to  furnish 
supplies  to  dealers  who  charged  prices  higher  than  the  recog- 
nized maximum  prices,  which  were  established  as  follows  :^ 

Street  Sales  from  Trolley 

North  London is.  lod.  per  cwt. 

South  London is.  i  id.  per  cwt. 

Shop  Sales 
id.  per  cwt.  higher  than  the  above  trolley  price  for  the  district. 

1  Board  of  Trade  Journal,  January  31,  1918,  p.  119. 

^  Ibid.,  p.  119. 

^  Labour  Gazette,  February,  191 7. 


150  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

Under  the  regime  of  the  Controller  of  Coal  Mines  the  regu- 
lation of  prices  was  extended  to  cover  both  wholesale  mer- 
chants' charges  and  retail  prices.  Powers  to  fix  prices  were 
confirmed  by  the  Wholesale  Coal  Prices  Order  and  the  Retail 
Coal  Prices  Order  made  by  the  Board  of  Trade  on  September 
5  and  1 1 ,  respectively.  The  function  of  fixing  in  each  locality 
the  maximum  retail  prices  of  house  coal  which  would  comply 
with  the  requirements  of  the  Retail  Coal  Prices  Order  was 
assigned  to  local  authorities.' 

As  the  requirements  of  the  Admiralty  and  of  essential  war 
industries  expanded  enormously,  supplies  available  for  in- 
land consumers  had  to  be  cut  down.  The  situation  became 
very  acute  in  the  spring  of  191 7,  after  a  prolonged  and  severe 
winter,  which  had  resulted  in  a  largely  increased  consumption 
of  house  coals.  Strictest  economy  was  insisted  upon  and  the 
London  district  definitely  rationed,  under  the  Household  Coal 
Distribution  Act,  which  was  passed  in  September,  191 7,  for 
London  and  a  large  area  around  the  city.  The  unit  of  dis- 
tribution was  the  room. 

No  person  could,  after  Octoberi ,  191 7,  sell,  deliver,  purchase 
or  acquire  for  consumption  in  ad  welling  house,  flat  or  tenement, 
coal  exceeding  the  quantities  allowed  in  the  following  table: 

Coal  allowance  from 
Number  of  rooms  occupied  October  i  to  March  31 

Not  more  than  4 2  cwts.  per  week 

5  or  6 ^  cwts. 

7 I   ton 

13,  14  or  15 2  tons 

More  than  15 2  tons,  10  cwts. 

For  the  period  from  April  i  to  September  30,  the  allowance 
was  at  the  rate  of  half  that  shown. 

Coal  allowances  in  excess  of  hundredweights  were  to  be 
reduced  in  the  event  of  stocks  of  coal  falling  below  a  deter- 
mined level. 

Additional  allowances  not  exceeding  2  hundredweights  per 
week  were  granted  in  certain  cases:  (i)  the  presence  of  aged 
and  infirm  persons,  invalids  or  young  children,  (2)  the  absence 
of  any  provision  for  gas,  electricity,  etc.^ 

'Board  of  Trade   Journal,   January  31,    1918,   p.    121;   September  20,    1917, 
pp.  621-622.  '     ^^  /' 

*  Labour  Gazette,  August  17,  p.  277. 


CHAPTER   IX 
Home  Production  of  Food  and  Minimum  Prices 

In  the  hope  of  obtaining  practical  proposals  for  increasing 
the  production  of  food,  three  departmental  committees  were 
appointed  in  June,  1915,  one  by  the  Board  of  Agriculture  and 
Fisheries,  one  by  the  Board  of  Agriculture  for  Scotland  and 
one  by  the  Department  of  Agriculture  and  Technical  Instruc- 
tion for  Ireland,  "to  consider  and  report  what  steps  should  be 
taken  by  legislation  or  otherwise  for  the  sole  purpose  of  main- 
taining and,  if  possible,  increasing  the  present  production  of 
food"  in  England  and  Wales,  Scotland  and  Ireland.'  The 
English  committee  was  appointed  on  June  17  and  a  month 
later  it  presented  its  Interim  report. ^ 

In  this  report  it  was  laid  down  that  the  main  problem  was 
how  to  increase  the  area  under  wheat,  95  per  cent  of  the  home 
supply  of  which  is  produced  in  England  and  Wales.  The 
committee  came  to  the  conclusion  that  this  could  be  solved 
only  by  extending  largely  the  area  of  land  under  tillage.  This 
would  enable  more  of  the  existing  arable  land  to  be  put  down 
in  wheat,  leaving  the  newly  broken  upland  for  the  other  neces- 
sary crops  thus  displaced,  such  as  oats  and  potatoes.  In  order 
to  induce  farmers  and  landlords  to  change  some  of  their  meth- 
ods, with  their  comparative  security  of  profits,  and  to  influence 
them  to  undertake  the  responsibility  of  increased  arable  area 
in  the  face  of  certain  shortage  of  labor  and  of  a  possible  fall 
in  grain  prices  at  the  conclusion  of  the  war,  the  committee  pro- 
posed the  guaranteeing  of  a  minimum  price  of  45  shillings  a 
quarter  for  all  marketable  home  grown  wheat  for  a  period 
of  four  years.  The  committee  estimated  that,  if  such  a  guar- 
antee were  given,  the  area  cropped,  which  was  just  under 
2,000,000  acres,  would  be  increased  by  at  least  another  million 

'  International  Review  of  Agricultural  Economics,  vol.  Ixi,  pp.  102-104;  see  also 
C.  S.  Orwin:  The  Report  of  the  Departmental  Committee  on  the  Home  Production 
of  Food,"  Economic  Journal,  March,  1916,  pp.  108;  Labour  Gazette,  November, 
1915.  p.  326 

^  Cd.  8048. 

11  151 


152  PRICES   AND    PRICE   CONTROL   DURING   THE    WAR 

acres  in  1916,  in  which  case  there  would  be  4  or  5  million 
quarters  more  wheat  grown  at  home  (an  additional  six  weeks' 
supply  for  the  whole  of  the  United  Kingdom). 

The  committee  recognized  that  a  guaranteed  price  for 
wheat  should  entail  upon  the  farmer  the  obligation  to  pay  a 
fair  rate  of  wages  to  his  laborers;  in  fact,  some  members  were 
evidently  in  favor  of  accompanying  the  minimum  price  with  a 
minimum  wage.  They  contented  themselves,  however,  with 
recommending  that  an  inquiry  into  wages  and  earnings  should 
be  instituted  at  once. 

As  to  the  method  of  carrying  out  the  guarantee,  the  com- 
mittee recommended  that  payment  to  the  farmer  should  be 
regulated  by  the  difference  between  45s.  and  the  Gazette  aver- 
age price  of  wheat  for  the  year  in  which  the  wheat  is  harvested, 
the  farmer  being  left  to  dispose  of  his  produce  in  the  open 
market. 

The  committee  noted  the  objection  to  their  proposal  that 
it  was  conceivable  that  no  great  quantity  of  additional  wheat 
might  be  produced  beyond  what  would  have  been  grown  had 
no  guarantee  been  offered,  and  that  the  state  might,  if  wheat 
prices  fell,  be  obliged  to  pay  a  considerable  sum  for  a  com- 
paratively unimportant  result.  Rejecting  as  unworkable  in 
practice  the  suggestion  that  the  guarantee  should  be  limited 
to  the  additional  wheat  grown  by  farmers  over  and  above 
their  prewar  production,  measured  by  the  harvest  of  1913, 
the  committee  recommended  that  the  guarantee  should  be 
confined  to  those  farmers  who  were  able  to  show  that  they 
had  made  a  reasonable  effort  to  increase  the  production  of 
wheat.  As  a  test  they  proposed  that  a  farmer  claiming  the 
grant  should  be  asked  to  show  (a)  that  he  had  increased  his 
area  under  arable  production  by  at  least  one-fifth  over  the 
similar  area  in  October,  1913,  or,  in  the  alternative  (b)  that 
at  least  one-fifth  of  his  total  acreage  under  grass  and  annual 
crops  was  actually  under  wheat. 

The  committee  considered  the  question  whether,  if  a  mini- 
mum price  was  secured  to  the  farmer,  there  should  not  be  a 
maximum  price  at  which  the  government  would  have  the 


GREAT    BRITAIN  1 53 

right  to  take  over  all  home  grown  wheat.  Without  making  any- 
definite  recommendation  in  this  matter,  the  committee  sug- 
gested that  if,  in  the  opinion  of  the  government,  a  maximum 
price  was  desirable,  it  should  be  fixed  at  not  less  than  55s.  per 
quarter. 

After  a  consideration  of  the  interim  report,  the  government 
decided  not  to  adopt  the  recommendation  of  a  guaranteed 
minimum  price  for  wheat.  The  reasons  for  this  decision  were 
set  forth  by  Lord  Selborne,  President  of  the  Board  of  Agricul- 
ture, at  a  meeting  of  representatives  of  the  Royal  Agricultural 
Society,  the  Central  Chamber  of  Agriculture,  the  National 
Farmers'  Union  and  other  organizations,  which  was  held  in 
London  on  August  26.  Lord  Selborne  stated  that  shortly 
after  the  report  had  been  received  the  agricultural  returns 
for  1 91 5  came  to  hand.  As  compared  with  191 3,  there  were 
500,000  more  acres  of  wheat  under  cultivation,  an  increase  of 
nearly  30  per  cent,  while  the  increase  in  cattle  was  384,000  and 
in  sheep  450,000.  In  view  of  these  remarkable  figures,  of  the 
fact  that  the  call  of  agricultural  laborers  to  the  colors  would  be 
very  heavy  in  the  coming  year,  of  the  superabundant  harvests 
in  Canada  and  Australia  and  of  the  financial  stringency  which 
would  prevail  after  the  war,  the  government  decided  that  they 
would  not  incur  the  additional  financial  liability  involved  in 
the  proposed  guarantee  of  a  minimum  price  for  wheat. 

On  October  15,  1915,  the  committee  presented  its  final 
report  (Cd.  8095) .  They  again  took  the  opportunity  of  stating 
their  firm  conviction  that  the  conversion  of  arable  land  into 
grass,  which  has  taken  place  to  the  extent  of  nearly  4,000,000 
acres  during  the  last  40  years  and  is  still  going  on,  was  bound 
to  result  in  a  diminution  of  the  food  produced,  and  that  much 
of  this  land  would  carry  more  stock  if  put  under  the  plow, 
while  at  the  same  time  producing  corn  for  human  consump- 
tion. The  remainder  of  the  final  report  dealt  with  the  pro- 
vision of  fertilizers  and  feed,  increased  pig  breeding,  labor, 
labor  saving  machinery  and  the  employment  of  women. 
Attention  was  also  called  to  the  use  of  waste  land  in  towns 
and  villages  for  the  production  of  vegetables. 


154  PRICES    AND    PRICE   CONTROL    DURING   THE    WAR 

The  report  of  the  Scotch  committee  contains  no  recommen- 
dation as  to  the  establishment  of  a  minimum  price.  The 
advisabiHty  of  resorting  to  artificial  means  in  order  to  stimu- 
late the  production  of  wheat  was  considered  by  the  committee 
and  some  of  the  witnesses  gave  evidence  in  favor  of  a  guar- 
anteed minimum  price,  but  they  did  not  see  their  way  to 
overcome  the  practical  difficulties  which  were  likely  to  arise. 

The  Irish  committee,  recommended  that  the  government 
should  guarantee  a  minimum  price  for  oats  and  wheat  for  one 
year;  they  expressed  the  opinion  that  in  view  of  the  risk  of 
loss  run  by  the  farmer  in  breaking  up  grass,  there  would  be  no 
departure  from  sound  economic  policy  in  agreeing  to  a  mini- 
mum price  to  secure  him  against  contingencies.  No  actual 
figures  were  suggested  for  the  guaranty. 

The  question  of  guaranteed  minimum  prices  for  wheat  and 
for  oats  was  brought  to  the  front  in  connection  with  the  Corn 
Production  Bill,  which  Mr.  Prothero  introduced  into  the  Par- 
liament in  the  early  part  of  191 7.  For  the  purpose  of  obtain- 
ing a  larger  home  grown  food  supply,  the  bill  proposed  that 
the  following  minimum  prices  be  fixed  for  wheat  and  oats  of 
the  following  years: 

Wheat  Oats 

Year  per  Qr.  per  Qr. 

1917 60  o   38  6 

1918I 

1919  [ 55  o  32  o 


1920  I 

192  M 
1922  J 


192 1  I       45  o  24  o 


The  average  price  was  to  be  arrived  at  from  the  weekly 
averages,  ascertained  in  accordance  with  the  Corn  Returns 
Act,  during  the  seven  months  beginning  on  September  i.  As 
a  corollary  to  guaranteed  minimum  prices,  the  bill  provided 
(i)  a  minimum  wage,  to  be  fixed  by  an  Agricultural  Wages 
Board,  which  would  aim  at  securing  for  able  bodied  men 
wages  which,  in  the  Board's  opinion,  are  "equivalent  to  wages 
for  an  ordinary  day's  work,  at  the  rate  of  at  least  25s.  a  week" ; 
(2)  a  restriction  of  the  power  of  landlords  to  raise  the  rents  of 
existing  tenants.     The   Board  of  Agriculture   could  enforce 


GREAT    BRITAIN  155 

proper  cultivation  by  determining  varying  covenants  or  con- 
ditions of  tenancy,  or  by  entering  on  the  land  and  doing  all 
such  things  as  appeared  necessary  for  cultivating  it.' 

The  bill  provided  that,  if  the  average  price  of  wheat  or 
oats  of  any  year  for  which  a  minimum  price  was  fixed  was  less 
than  this  minimum  price,  the  farmer  was  entitled  to  be  paid 
by  the  Board  of  Agriculture  and  Fisheries  for  each  quarter  of 
wheat  or  oats  which  he  produced  and  sold  a  sum  equal  to  the 
difference  between  the  average  price  and  the  minimum  price 
per  quarter. 

Previous  to  the  introduction  of  the  above  bill  a  far-reaching 
"endowment  of  agriculture"  had  been  partly  adopted  as  a 
war  measure.  The  announcement  to  this  effect  was  made 
by  the  Prime  Minister  in  his  speech  on  February  23,  191 7. 
The  measures  were  outlined  in  the  report  of  the  Agricultural 
Policy  Subcommittee  of  the  Reconstruction  Committee  (Cd. 
8506) ,  which  was  appointed  in  August,  1 9 1 6.  The  guaranteed 
prices  recommended  by  this  subcommittee  were  42s.  a  quarter 
for  wheat  and  23s.  a  quarter  for  oats.  The  farmer  was  to 
receive  from  the  state  the  difference  between  these  prices  and 
the  Gazette  average  price  for  the  year  in  case  the  latter  was 
lower.     The  guarantee  was  to  be  perpetual. ^ 

Both  the  subcommittee's  report  and  the  Corn  Bill  aroused 
a  great  deal  of  opposition,  the  Nation  (among  many  others) 
having  expressed  itself  with  great  frankness  and  vehemence  on 
the  subject.  In  an  article  "Quack  Medicine  for  Agriculture," 
the  periodical  pointed  out  that  the  reasons  for  the  British  low 
production  in  agriculture  were  a  medieval  system  of  land 
tenure,  half  serf  labor,  lack  of  brains,  science,  capital,  enter- 
prise, cooperation,  personal  interest.^  These  conditions  could 
not  be  cured  by  guaranteed  prices  and  by  state  subsidies. 

The  Corn  Bill  was  also  attacked  because  of  its  failure  to 
protect  the  community.  It  was  brought  out  in  the  debate  in 
the  House  of  Commons  on  July  10  and  1 1  that  the  farmers  and 
the  landlord  were  guaranteed  against  loss  or  risk  in  return  for 

^  The  Economist,  April  28,  19 17,  p.  727. 

2  Ibid.,  March  31,  191 7,  p.  580. 

'  The  Nation.  March  31.  1917.  p.  873. 


156  PRICES   AND    PRICE    CONTROL    DURING   THE   WAR 

the  extra  efforts  they  were  asked  to  make,  but  that  the  bill 
contained  no  provision  for  claiming  for  the  state  any  part  of  the 
extra  profits  which  were  by  no  means  unlikely  to  be  realized. 
This,  according  to  the  critics  of  the  bill,  was  unfair  to  the  tax- 
payer who  shoulders  the  liability  in  case  of  loss.^ 

Mr.  Runciman,  who  was  President  of  the  Board  of  Agricul- 
ture from  191 1  to  1914,  suggested  for  improving  the  wheat 
situation,  instead  of  guaranteed  prices,  the  storage  of  corn,  an 
adequate  labor  supply,  rural  housing,  the  extension  of  agri- 
cultural education,  cooperation  and  farm  experiments.  As  the 
Round  Table  correctly  commented  on  these  suggestions,  though 
admirable  as  a  peace  program,  "  they  sounded  singularly  un- 
helpful in  the  present  crisis  of  the  war."^  This  magazine  con- 
siders the  guarantee  an  ingenious  way  of  giving  the  farmer  a 
stimulus  for  the  cultivation  of  cereals  without  the  setting  up  of 
a  tariff  and  its  accompanying  uncertainties  and  inconveniences. 

Others  who  were  in  favor  of  artificial  aid  to  agriculture 
attacked  the  government  for  not  having  acted  upon  the 
advice  of  the  British  committee  in  191 5;  they  reproached 
the  government  because  of  its  short  sightedness,  neglect  and 
oversanguine  view  regarding  the  submarine  peril.'  Even  the 
Spectator  came  out  in  the  support  of  the  Corn  Production  Bill, 
"because  England  is  a  besieged  nation."^ 

At  the  beginning  of  January,  19 17,  the  Food  Controller 
fixed  the  minimum  price  to  the  growers,  for  wheat  of  first 
quality  of  the  191 7  crop,  at  60s.  per  quarter  of  504  pounds. 
Minimum  prices  were  fixed  at  the  same  time  for  oats  and  for 
potatoes.^  As  this  guarantee  came  practically  too  late  in  the 
season  to  have  very  much  effect  on  the  acreage  under  grain, 
one  may  safely  state  that  during  the  first  three  and  a  half 
years  of  the  war,  except  for  receiving  some  supplies  of  fertilizers 
and  feeding  stuffs  and  some  advice  and  information,  the  farm- 
ers were  not  interfered  with  in  their  activities  by  the  state. 

»  The  Economist,  April  28,  1917,  p.  727;  July  14,  1917. 
^  The  Round  Table,  June,  19 17,  p.  554. 

»  Politicus:  "The  Food  Problem  and  Its  Solution,"  The  Fortnightly  Review,  vol. 
ci,  1917,  p.  435. 

*  The  Spectator,  July  28,  1917,  p.  78. 

5  Board  of  Trade  Journal,  January  11,  1917,  p.  96;  February  15,  1917,  p.  485. 


GREAT    BRITAIN  1 57 

What  they  have  done  may  be  seen  from  the  official  estimates 
of  the  crops  of  the  United  Kingdom  in  each  of  the  four  years 
since  the  outbreak  of  the  war:^ 

1914  1915  1916  1917 

Grs.  Grs.  Grs.  Grs. 

Wheat 7,804,000  9,239,000  7,472,000  8,040,000 

Barley 8,065,000  5,862,000  6,612,000  7,189,000 

Oats 20,664,000  22,308,000  21,334,000  26,023,000 


Total 36,533.000      37,409,000      35,418,000        41,252,000 

Tons  Tons  Tons  Tons 

Potatoes 7,466,000         7,540,000         5,468,000  8,603,000 

The  areas  under  cultivation  were  increased  between  191 4 
and  191 7  as  follows:^ 

1914  1917  Increase  or  Decrease 

Acres  Acres  Acres 

Arable  land 19,414,000  19,652,000  +238,000 

Wheat 1,906,000  2,104,000  +198,000 

Barley 1,873,000  1,797,000  -76,000 

Oats 3,899,000  4,762,000  +863,000 

Total  corn  crops 7,678,000  8,663,000  +985,000 

Potatoes 1,209,000  1,365,000  +156,000 

A  compulsory  census  taken  in  April,  191 8,  gave  the  follow- 
ing acreage  under  the  leading  crops: 

ENGLAND   AND  WALES 

Crop  Acres  Increase  over  191 6 

Wheat 2,665,000  +752,000  +39% 

Barley i  ,490,000  +  58,000  + 1 1 

Oats 2,820,000  +735,000  +35 

Rye,  dredge  corn  and  pulse 682,000  +280,000  +69 

Potatoes 645,000  +217,000  +50 

Total  of  corn  and  potatoes 8,302,000      +2,042,000 

The  area  under  wheat  was  the  highest  recorded  since  1882; 
that  under  oats  and  potatoes  the  highest  on  record  by  20  per 
cent  and  27  per  cent,  respectively.^     Similar  estimates  for 

»  R.  Henry  Rew:  "The  Prospects  of  the  World's  Food  Supplies  after  the  War," 
Journal  of  the  Royal  Statistical  Society,  January,  1918,  p.  44. 

2  Ibid.,  p.  43.  . 

1  Report  (interim)  issued  by  the  Director  General  of  Food  Production.  1  he 
Economist,  June  i,  19 18,  p.  940. 


158  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

Scotland  and  Ireland  were  300,000  and  1,500,000  acres,  respec- 
tively, making  a  total  increase  of  over  4,000,000  acres.  On 
the  dint  of  the  above  figure  the  Director  General  of  Food 
Production  estimated  that  if  an  "average"  crop  is  realized, 
the  United  Kingdom  harvest  of  191 8  will  supply  four-fifths  of 
the  yearly  requirement  of  breadstuffs,  as  compared  with  one 
quarter  of  the  year  191 7-18  and  one-fifth  of  the  year  191 6-1 7. 
The  Economist  warns  against  accepting  the  latter  part  of  the 
report  on  its  face  value,  as  it  is  based  largely  upon  "estimates " 
and  "anticipations"  and  not  upon  definitely  ascertained 
facts.  1  A  similar  view  is  held  by  the  Statist.  This  periodical 
reminds  its  readers  that  the  average  yield  of  crops  has  fallen 
rather  heavily  since  the  commencement  of  the  war  and  that 
further  developments  in  this  direction  are  possible. ^ 

The  rising  price  and  the  shortage  of  fertilizers  and,  to  some 
degree,  of  feeding  stuffs,  coupled  with  the  withdrawal  of  labor 
from  the  land,  all  tended  to  diminish  the  average  yield  per 
acre.  In  comparing  the  yields  of  some  of  the  chief  crops  in 
the  three  years  affected  by  war  conditions  with  the  standard 
of  the  previous  ten  years,  one  obtains  the  following  results  for 
England  and  Wales. ^ 

AVERAGE   YIELD   PER  ACRE 

Increase 
1905-14  1915-17  or 

Decrease 

Bushels  Bushels  Bushels 

W  heat ->  ->  r> 

Barley ; J'  J  H^  -^^ 

Oats. Ill  30.3  -2.9 

Beans ..W:. 40.2  33.8  -,.4 

Peas Ill  25-0  -5-3 

26.4  23.2  -3.2 

In  the  United  Kingdom  the  number  of  cattle  increased  from 
12,184,000  in  1914  to  12,342,000  in  1917,  an  increase  of  158,000 
head;  the  number  of  sheep  declined  from  27,964,000  to 
27,771,000  a  decrease  of  193,000,  and  that  of  pigs  from  3,953,- 
000  to  2,999,000,  a  decrease  of  954,000. 

\  Z¥  ^<^onomist,  June  i,  1918,  p.  940. 
^  The  Statist,  June  8,  1918,  p.  983. 
*  Rew:  op.  cit.,p.  45. 


GREAT    BRITAIN  1 59 

The  yearly  quantities  in  tons  of  home  grown  and  imported 
meats  (beef,  mutton  and  lamb)  available  for  consumption  in 
the  United  Kingdom  for  the  last  five  years  were:^ 

1913    1914    1915    1916  1917 

Homegrown 1,095,300     1,115,560     1,118,010     1,142,910  1,085,000 

Colonial  frozen 272,900        286,609        286,380        211,409  226,000 

South  American,  chilled 

proper 447,36o        403-476        323.762        267,309  258,000 

North  American,  chilled 

and  frozen 401            4,380          53-835          54-998  66,000 

Live    stock    and    fresh 

killed 10,245            7,852            2,552               827  

Totals 1,826,206     1,817,877     1,784,539     1.677.453  1.635,000 

1  The  Economist,  March  30,  1918,  p.  534. 


CHAPTER   X 

Criticism  of  Price  Fixing 

-  Criticisms  of  price  fixing  have  been  numerous  and  varied, 
the  arguments  used  by  the  critics  ranging  from  a  blanket 
assertion  that  "high  prices  are  nature's  cure  for  scarcity"  to 
most  elaborate  and  painstaking  demonstrations  as  to  how  this 
or  that  measure  passed  by  the  government  affected  the  pro- 
duction, importation  and  distribution  of  some  particular  com- 
modity. The  dangers  of  governmental  control  of  prices  as 
pointed  out  by  its  opponents  are  double  in  character,  political 
and  economic.  'The  political  danger  lies  in  giving  too  much 
power  to  uncontrolled  Cabinet  authority  and  in  making  the 
people  rely  more  and  more  on  the  government  for  action  in 
order  to  remedy  conditions  which  can  best  be  met  through 
the  exercise  of  private  initiative  and  through  the  operation  of 
economic  laws.^  The  government  begins  to  regulate  prices 
largely  because  of  the  pressure  of  public  opinion.  But  as  the 
lowering  of  prices  when  there  are  not  enough  commodities  to 
-  go  around  can  not  satisfy  the  demand,  the  only  tangible  results 
'  of  it  are  inconveniences  and  disappointments.  People  go  to 
^the  shops  in  the  expectation  of  obtaining  food  at  the  legal 
price  and  after  waiting  for  hours  they  go  away  empty  handed. ^ 
False  hopes  are  raised  and  dissatisfaction  and  discontent 
result.  /People  are  made  to  believe  that  high  prices  are  the 
result  of  artificial  manipulations  removable  at  will^  and  not  an 
"inevitable  consequence  of  the  world  conditions  brought 
about  by  the  war;"  ^  they  clamor  for  stricter  measures  of  con- 
trol and  for  more  price  regulation. 

In  discussing  the  reasons  for  and  the  value  of  high  prices  the 
assertion  has  been  repeatedly  made  that  the  rise  in  prices  indi- 

*  The  Spectator,  January  23,  1917,  p.  692. 

*  Ibid.,  March  31,  1917,  p.  382. 

'A.  Shadwell:  "Food  Prices  and  Food  Supply,"  The  Nineteenth  Century  and 
After,  April,  19 17,  p.  736. 

*  E.  Cannan:  "Industrial  Unrest,"  The  Economic  Journal,  December,  1917. 

160 


GREAT    BRITAIN  l6l 

cates  one  of  two  things,  either  increase  of  demand  or  shortage 
of  supply.  Under  such  circumstances  high  prices  are  neces- 
sary; they  act  as  a  check  on  consumption,  as  an  eHminator  of 
waste,  as  well  as  a  factor  stimulating  production  and  importa- 
tion. [  It  is  madness  on  the  part  of  the  government  to  arti- 
ficially interfere  with  prices,  as  by  such  interference  they  are 
taking  the  first  step  towards  creating  the  shortage  which  it  is 
imperative  to  prevent.^ 

High  prices  not  only  draw  commodities  from  the  ends  of  the 
earth  and  offer  an  inducement  for  enlarging  production,  but 
they  are  supplying  the  very  means  by  which  the  expansion  of 
business  can  be  carried  on.  ''Efforts  to  increase  output  now 
.  must  be  made  upon  a  level  of  costs  that  is  temporary 
and  abnormal  and  unless  prices  are  high  these  efforts  can  not 
and  will  not  be  made. 2" 

It  is  obvious  that  prices  must  be  such  as  to  afford  a  working 
profit  to  the  least  efiicient  producers  whose  output  is  needed 
to  satisfy  the  demand.  Since  the  war  began  many  discarded 
blast  furnaces,  many  abandoned  mills  have  been  refitted  and 
put  once  more  into  operation.  These  are  often  worked  by 
inexperienced  laborers,  the  cost  of  production  of  such  plants 
is  necessarily  high  and,  as  long  as  their  output  is  needed,  it 
must  be  met  by  high  prices  for  the  finished  products. 

The  most  important  consideration  before  the  country,  as 
has  been  pointed  out  by  Mr.  Runciman  in  his  numerous 
speeches,  and  as  has  been  asserted  by  many  other  speakers 
and  writers,  is  not  the  question  of  price,  but  that  of  supply; 
by  restricting  prices  the  government  is  "encouraging  consump- 
tion, discouraging  production  and  preparing  disaster."^ 

It  is  much  easier  to  fix  maximum  prices  than  to  ensure  the 
availability  of  supplies  at  such  prices.  After  the  price  has 
been  fixed  the  government  must  see  to  it  that  people  who  own 
stocks  of  goods  do  not  withhold  them  from  sale  in  expectation 
that  the  price  will  be  raised,  and  that  farmers  and  manufac- 

'  The  Spectator,  February  6,  1915,  p.  181. 

2  The  Economic  World,  Julv  21,  1917,  p.  78. 

3  Politicus:  "The  Food  Problem  and  Its  Solution,"  Fortnightly  Review,  vol.  loi, 
p.  438:  also  The  Spectator,  March  31,  1917,  pp.  382-383. 


1 62  PRICES   AND   PRICE   CONTROL   DURING   THE    WAR 

turcrs  continue  production;  this  is  equivalent  to  industrial 
conscription  in  an  extreme  form.i  Without  such  conscription, 
a  necessary  corollary  of  arbitrary  maximum  prices  fixed  below 
the  ruling  market  prices,  "a  period  of  acute  shortage  even  of 
starvation  for  the  poor  can  be  easily  brought  about. "^ 

\\'hen  price  fixing  is  once  begun  there  is  no  way  of  stopping 
it.  One  can  not  thrust  the  ramrod  of  maximum  prices  into 
the  delicate  mechanism  of  industry  and  commerce  in  but  a 
few  arbitrarily  selected  places.^  It  is  idle  to  fix  prices  for  a 
few  cereals  and  tubers,  leaving  other  foodstuffs  unregulated. 
Such  procedure  opens  the  way  to  substitution  and  it  may  lead 
to  total  disappearance  of  the  regulated  articles  from  the  mar- 
ket. If  the  price  is  fixed  only  for  milk,  milk  may  be  converted 
into  butter;  if  the  price  of  butter  is  also  regulated,  milk  and 
butter  may  be  converted  into  cheese;  if  cheese  is  added  to  the 
list  of  controlled  foods,  milk  cows  may  be  converted  into  beef; 
if  the  price  of  beef  is  also  fixed,  the  farmers  may  withdraw  en- 
tirely from  dairying  and  cattle  raising,^  and  so  on,  until  the 
policy,  in  order  to  have  any  chance  of  success,  is  extended  to 
all  the  products  as  well  as  to  all  the  processes,  the  materials 
and  the  labor  involved  in  their  making.  According  to  the 
Bankers  Magazine  "  the  only  just  and  fair  system  for  regulat- 
ing and  controlling  prices,  in  an  equitable  manner,  is  to  fix  all 
prices:  (i)  the  prices  of  all  commodities — all  articles  of  mar- 
ketable wealth:  (2)  the  rates  of  hire — rent,  interest,  freight 
for  every  kind  of  both  fixed  and  circulating  capital;  (3)  the 
rates  of  hire — wage,  salary,  pay — for  every  kind  of  both 
skilled  and  unskilled  labor."^ 

This,  however,  leads  to  the  binding  of  the  entire  trade  of 
the  country  into  an  inextricable  tangle  of  official  regulations; 
it  involves  the  appointment  of  numerous  boards  and  com- 

'  The  Saturday  Review,  September  9,  1917,  p.  242;  also  The  Spectator,  vol.  117, 
1916,  p.  465.  In  the  latter  an  attack  is  made  on  Mr.  Barnes,  Labor  member  in 
the  House  of  Commons,  for  his  speech  demanding  among  other  things  the  fixing 
of  the  price  of  milk  and  making  it  a  penal  offense  for  any  farmer  to  give  up  the 
business  of  dairying. 

*  The  Nation,  January  2,  1917. 
'  Ihid..  January  20,1917. 

*  The  Saturday  Review,  September  9,  1917,  p.  242. 
^Bankers'  Magazine.  January,  1918,  p.  94. 


GREAT    BRITAIN  1 63 

missions,  the  employment  of  countless  supervisors,  clerks  and 
other  officials,  the  issuance  of  innumerable  orders,  rules  and 
regulations;  it  also  "involves  endless  frauds,  including  the 
wholesale  forgery  of  food  tickets,  together  with  a  general 
lowering  of  the  moral  standards  of  the  community."' 

Beginning  with  the  promulgation  of  a  few  orders  regulating 
prices.  Great  Britain  "reached  a  stage  when  practically  every- 
thing is  controlled,  and  the  greater  the  control  the  more  com- 
plete the  confusion  and  the  greater  the  economic  loss.""^ 

Light  was  shed  on  the  present  conditions  by  a  list  published 
at  the  end  of  191 7;  this  list  enumerates  certain  commissions 
and  committees  set  up  to  deal  with  public  questions  arising 
out  of  the  war.  The  following  committees  deal,  directly  or 
indirectly,  with  food,  fuel  and  clothing:^ 

Agricultural  and  Fisheries  Board  and  Royal  Agricultural 
Society  (Joint  Committee) ;  Agricultural  and  Consultative 
Committee;  Cargoes  (Diverted)  Committee;  Cargoes  (Delay 
in  Unloading)  Committee;  Cattle,  British  Committee  on 
Utilization  of;  Coal  Exports  Committee;  Coal  Mines  (Con- 
troller of)  Advisory  Board;  Coal  Mines  Department;  Cotton 
Control  Board;  Cotton  Exports  Committee;  Distributing 
Trades  (Scotland)  Committee;  Exports  Committee;  Fertil- 
isers Commitee;  Fish  (Coarse)  Irish  Committee;  Fish  (Cured) 
Committee;  Fish  Food  and  Motor  Loan  Committee;  Fish 
Food  Committee;  Fresh  Water  Fish  Committee;  Fisheries, 
Sea,  (Scottish)  Committee;  Flour  Mills  Control  Committee; 
Food  Ministry;  Food  Production  Advisory  Committee;  Food 
Production  Department; Food  Production  in  Ireland  Advisory 
Committee;  Food  Production  in  Ireland  Departmental  Com- 
mittee; Food  Production  in  Scotland  Committee;  Foodstuffs 
(Carriage  of)  Requisitioning  Committee;  Forage  Committee 
(Farm  Produce);  Fruits  (Import  Licenses)  Committee;  Grain 

U.  Hilton:  "The  Foundation  of  Food  Policy,"  The  Edinburgh  Revieiv,  July, 
1917,  p.  50. 

2  A.  Hurd:  "Wages,  Prices  and  Supplies — A  Vicious  Circle,"  Fortnightly  Review, 
January,  1918,  p.  45.  ,.,,,.. 

^  List  of  certain  commissions  and  committees  set  up  to  deal  with  public  questions 
arising  out  of  the  war,  Cd.  8741 ;  quoted  from  A.  Hurd:  "Wages,  Prices  and  Sup- 
plies— A  Vicious  Circle,"  Fortnightly  Review,  January,  1918,  p.  45. 


164  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

and  Potato  Crops  (191 7)  Committee;  Grain  Supplies  Commit- 
tee; Import  Restrictions  Department;  Indian  Wheat  Com- 
mittee; Kitchen  (Central)  Committee;  Leather  Supplies  Com- 
mittee; Meat  Supplies,  Interdepartmental  Committee;  Milk 
Distribution  Committee;  Oats  Control  Committee;  Pig 
Breeding  Industry  (Ireland)  Departmental  Committee;  Port 
and  Transit  Executive  Committee;  Poultry  Advisory  Com- 
mittee; Committee  on  Production;  Rationing  Consultative 
Committee;  Relief  of  Distress  Committee;  Sugar  Supplies 
Royal  Commission;  Tea  Advisory  Committee;  Tea  Control 
Committee;  Wheat  Executive;  Wheat  Supplies  Royal  Com- 
mission; Wool  Purchase  Central  Advisory  Committee. 

In  discussing  maximum  price  fixing  for  agricultural  prod- 
ucts, the  Nation  asked  very  pertinently:  "  Does  Mr.  Prothero, 
when  he  says  a  farmer  can  get  a  profit  at  £6,  mean  any  farmer, 
or  a  farmer  with  the  best  potato  lands?"  It  called  attention 
to  the  folly  and  injustice  of  fixing  selling  prices  not  merely  for 
existing  but  for  future  supplies,  without  any  guarantee  against 
further  rises  in  the  cost  of  production.' 

The  Spectator  called  attention  to  the  profound  mistake  made 
by  the  government  in  assuming  that  it  can  regulate  agricul- 
tural produce  with  the  same  ease  that  it  can  control  the  out- 
put of  staple  manufactures.  The  factory  is  designed  and 
equipped  for  one  more  or  less  narrow  line  of  product  and  is 
incapable  of  being  readily  diverted  to  any  other  line.  The 
manufacturer  keeps  books  and  his  business  can  be  easily 
supervised.  Agriculture,  on  the  other  hand,  is  carried  on  by 
a  great  number  of  farmers,  who  do  not  keep  books  and  produce 
a  variety  of  foodstuffs,  altering  their  production  as  prices 
fluctuate. 2 

The  food  administrators,  writes  Mr.  Hilton,  have  hovered 
confusedly  between  penalizing  the  food  producer,  out  of  ten- 
derness for  the  poor,  and  spoon  feeding  him  to  the  greater 
prosperity  of  agriculture.  At  one  moment  he  must  sell  his 
milk  for  less  than  it  is  worth;  at  another  he  must  have  a 

*  The  Nation,  January  20,  1917. 

*  The  Spectator,  August  4,  19 17,  p.  1 10. 


GREAT    BRITAIN 


165 


bounty  If  the  price  of  grains  drops.  "Yesterday  he  must  not 
receive  more  per  ton  for  the  remnant  of  his  frost  killed  and 
disease  perished  potato  harvest  than  he  would  have  got  had 
his  stocks  remained  intact;  today  he  must  have  a  maximum 
price  changed  to  a  minimum  price,  apparently  on  the  ground 
that  he  seems  somehow  keen  on  it,  and,  anyhow,  it  is  only  a 
matter  of  two  letters."^ 

At  the  best,  the  fixing  of  a  price  or  the  establishment  of  a 
ruling,  in  accordance  with  which  goods  should  be  distributed, 
lacks  the  element  of  elasticity,  and  because  of  this  it  can  not 
solve  satisfactorily  all  the  complex  problems  of  economic  life. 
But  when  the  government  fails  to  secure  the  help  of  the  most 
experienced  men  in  those  industrial  activities  which  it  sets  to 
regulate,  when  it  supplants  those  whose  life  work  has  been  the 
direction  of  business  affairs  by  experimenting  officials,  rigid 
action  is  likely  to  lead  into  a  sea  of  difficulties, 

Nonemployment  by  the  government  of  the  existing  chan- 
nels of  trade — particularly  merchants  and  distributors — to 
carry  out  its  purpose,  has  been  bitterly  attacked  in  a  report 
issued  by  the  Merchants  Committee  of  the  London  Chamber 
of  Commerce.  This  report  points  out  that  the  government 
in  the  steps  it  has  taken  to  regulate  supplies  has  not  sufficiently 
availed  itself  of  the  services  of  the  mercantile  community. 
The  action  of  the  Controller  has  In  many  cases  led  to  high 
prices  and  ultimate  scarcity. ^  According  to  the  report,  the 
main  cause  of  the  rise  In  prices  has  been  the  shortage  of  ship- 
ping tonnage.  The  only  means  for  overcoming  this  is  to 
stimulate  production  the  world  over  by  all  possible  means 
and  to  see  that  the  tonnage  available  is  used  to  the  best  pur- 
pose. This  can  best  be  done  by  encouraging  ordinary  trading 
channels  in  every  way,  with  a  minimum  of  governmental  inter- 
ference. The  committee  saw  no  adequate  ground  for  dispens- 
ing with  the  services  of  the  merchant,  whose  relations  with 
the  suppliers  and  expert  knowledge  of  goods  Involved  should 
entitle  him  to  be  treated  on  reasonable  terms  by  the  state  in 

'  Hilton:  op.  cit.,  p.  47-48. 

*  Iron  and  Coal  Trades  Review,  London,  August  10,  191 7,  p.  I37- 


l66  PRICES    AND    PRICE    CONTROL   DURING    THE    WAR 

a  business  with  which  he  alone  had  actual  experience  in  the 
past.' 

The  government  in  its  control  of  trade  has  for  the  most  part  overlooked  the 
merchants'  collecting,  conserving  and  distributing  functions  and  acted  on  the 
assumption  that  products  must  inevitably  be  offered  to  the  people  in  the  United 
Kingdom.  That  assumption  can  be  justified  by  the  expectation  that  the  country 
is  ready  to  pay  higher  prices,  and  this  is  just  the  contingency  which  the  government 
wishes  to  avoid. 

Instead  of  employing  merchants  and  their  correspondents 
and  agents  in  all  parts  of  the  world  to  scour  their  respective 
fields,  the  government  does  nothing  in  many  fields  except  to 
fix  prices  or  limit  imports,  thus  checking  production  and  stop- 
ping the  machinery  by  which  production  is  fostered. ^  The 
merchants  asked  in  their  report  for  more  enlightened  control, 
a  control  that  would  check  speculation,  but  would  not  break 
up  the  mercantile  system  of  the  country. 

The  feeling  of  dissatisfaction  in  commercial  circles  against 
the  methods  adopted  by  departments  of  the  government  in 
controlling  and  restricting  trade  has  been  steadily  growing. 
A  public  meeting  was  held  in  London  on  October  25,  191 7, 
under  the  auspices  of  the  London  Chamber  of  Commerce,  to 
protest  against  the  administrative  methods  used,  particularly 
in  connection  with  the  import  and  export  business  of  the 
country.  Opinions  were  expressed  that  the  merchant  com- 
munity was  disregarded,  activities  of  importing  merchants 
seriously  reduced,  and  that  the  effect  of  this  was  a  serious 
shortage  of  supply.^  AH  sections  of  the  business  community 
demanded  that  the  government  should  cease  to  act  as  inter- 
mediary between  producers  and  consumers  and  should  largely 
call  upon  those  who  have  a  practical  acquaintance  with 
particular  trades,  to  assist  and  direct  the  various  control 
departments. 

In  calling  attention  to  the  views  expressed  at  the  merchants' 
mass  meeting,  the  Statist  wrote  that  these  views  were  those  of 
a  section,  but  of  a  section  of  such  importance  in  relation  to 

1  The  British  Trade  Journal,  September  i,  19 17,  p.  326 

*  Ibid.,  p.  326. 

^  Chamber  of  Commerce  Journal,  December,  191 7,  p.  297. 


GREAT    BRITAIN  1 67 

the  workaday  world  as  we  now  find  It,  that  the  opinions,  crit- 
icisms and  decisions  of  this  body  of  men  are  in  every  way 
worthy  of  very  serious  consideration  by  the  rest  of  the  com- 
munity and  particularly  by  the  government.' 

The  English  grocers  were  also  raising  objections  to  the 
manner  in  which  control  measures  were  being  executed.  The 
Federation  of  Grocers'  Associations,  at  its  annual  convention 
held  in  August,  191 7,  at  Portsmouth,  adopted  a  resolution 
opposing  any  form  of  rationing,  unwarrantably  costly,  and 
necessitating  a  new  army  of  officials  which  could  neither  fur- 
nish the  consumers  with  any  larger  supply  of  food  than  could 
be  distributed  through  the  existing  methods  nor  ensure  more 
equable  distribution.  Retailers  expressed  a  desire  that  a 
small  advisory  committee  of  each  trade  affected  by  orders 
should  assist  the  Food  Controller.^ 

If  the  control  exercised  by  the  government  has  been  a  cause 
for  criticism,  its  failure  to  exercise  any,  through  its  great 
weapon  of  finance,  was  also  attacked  on  many  occasions.  It 
was  emphasized  that  by  rationing  the  buying  power  of  the 
citizen  by  drastic  taxation,  the  Chancellor  might  have  greatly 
reduced  the  need  for  control  and  its  consequent  friction. ^ 

As  to  the  alternative  for  price  fixing,  the  government  should 
have  dealt  with  the  particular  evil  which  had  revealed  Itself. 
That  evil  was  not  the  rise  In  prices,  but  the  suspicion  of 
"profiteering.  ...  If  the  government  believed  that  the 
cry  against  'profiteering'  was  justified,  they  ought  to  have 
dealt  with  it  specifically  ...  by  limiting  the  profits,  by 
taxing  them."* 

^  The  Statist,  November  3,  1917,  p.  731. 

*  The  Interstate  Grocer,  August  25,  1917,  p.  I. 
'  The  Economist,  February  16,  1918,  p.  256. 

*  The  Spectator,  January  12,  1918,  p.  32. 


12 


APPENDIX  TO  PART  I 


THE  COURSE  OF   WHOLESALE   PRICES' 
(Price  levels  during  1890-1899=  100) 


23  0 


22.0 


ZIO 


ZOO 


190 


130 


17° 


l&O 


150 


lAO 


130 


1914 

1915 

1916 

rAMAHA 

• 

UNITED  KINGDOM 

UNITED  STATES 

1 
t 
1 

$ 

1 

1 

J       / 

/ 

Ir 

/   /-^^' 

/ 
/ 

/ 
/ 

y                 1 

/                      i 

f                                         / 

/                                        /' 

/  ^/ 

1 

i 

/  /^                 s    , 

/ 

^crr^^r^A^ 

—                                           .^ 

Z30 
ZZO 
ZIO 
ZOO 

190 

180 

170 

IbO 
150 
14-0 
130 


'  Labour  Gazette  (Canadian),  September,  1917,  P-  744. 


171 


172 


PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 


THE   RISE   IN   THE   RETAIL   PRICES  OF   FOODSi 
(Prices  in  July,  1914=  loo) 


>■  Labour  Gazette  (Canadian) .^September,  1917,  p.  741. 


GREAT    BRITAIN  1 73 


QUARTERLY   MOVEMENTS  OF   PRICES  1 
Summary  of  Index  Numbers,  1867-1877  =  100 


"O 

t« 

-a^ 

<u 

1 

_ 

fcd" 

2B 

!C 

"O 

JO 

4J 
4-) 

•4-1 

Years 

able 
n,  et 

c2  « 

t~~>   ■4-' 

62 

0 
0 
fa 

e2 

•4-' 

0)   0 

s^ 

03  T3 

"rt 

<U 

+-» 

-^^ 

"rt 

c 

3 

a 

1^ 

< 

■i-t 

C.2 

u 
0 

_> 
(7) 

1913 

I 

71.6 

IOI.5 

55-7 

79.2 

113. 1 

83-0 

84.2 

91 .6 

86.4 

44-9 

II 

71.4 

99.1 

52-7 

77-7 

114. 4 

81. 1 

83.2 

90.9 

85-3 

45-2 

III 

69 -3 

99  I 

52.1 

76.6 

no. I 

85-2 

83.2 

91. 1 

85.0 

45-6 

IV 

65.8 

98.7 

540 

75-4 

104.8 

86.7 

83-3 

90.1 

83.9 

44-1 

1914 

I 

66.6 

98.7 

52.0 

75-3 

104.4 

83-1 

84.1 

893 

83-4 

43-7 

II 

67.0 

97.8 

51-8 

75-2 

98.4 

82.9 

82.5 

86.9 

82.0 

43-4 

III 

80.3 

102.0 

61.5 

84.4 

96.2 

82.4 

87.1 

88.1 

88.1 

39-4 

IV 

90. 1 

100.9 

63-9 

88.6 

97-2 

77-5 

97.2 

9I-I 

90.1 

37-1 

1915* 

I 

105.0 

114. 6 

66.7 

100.8 

IIO.O 

85-4 

104.2 

100. 0 

100.3 

37-9 

II 

107.4 

129.0 

72.5 

108.0 

121  .6 

88.5 

107.4 

105-4 

106.5 

38.3 

III 

104.0 

130.5 

72.0 

107.0 

120.8 

93-5 

109.4 

107. 1 

107. 1 

37-9 

IV 

II3-8 

123.9 

68.7 

108.0 

131-2 

105.5 

II9-3 

118. 0 

113. 8 

42-5 

1916 

I 

125. 1 

137-5 

78.9 

119. 9 

150.0 

118. 1 

131. 1 

132.2 

127.0 

45-5 

II 

127.2 

1570 

88.2 

130.0 

156.2 

120.4 

135-0 

136.2 

133-3 

54-2 

III 

127.9 

150.4 

85 -9 

127.4 

I54-I 

127.8 

133-5 

137-3 

1-33  - 1 

57-3 

IV 

163. 1 

159-8 

92.2 

147.0 

160. 1 

146.2 

147.0 

150.3 

148.8 

57-5 

The  average  of  the  numbers  for  the  four  quarters  of  each  year  do  not  agree 
in  all  cases  with  the  annual  averages,  as  the  latter  are  partly  calculated  from  revised 
figures.  See  also  the  Journal,  1893,  p.  221;  1895,  p.  144;  1901,  p.  90;  and  1909, 
p.  70. 

'■Journal  of  the  Royal  Statistical  Society,  March,  1917,  p.  295. 


174 


PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 


COMPARATIVE  STATEMENT  OF   PRICES  OF  CERTAIN  COMMODI- 
TIES IN  APRIL,  1918,  AND  AT  THE  CLOSE  OF  THE  THREE 
PRECEDING  MARCH  QUARTERS 


Cleveland  \o.  3  pig  iron  per  ton 

Steel  rails per  ton 

Coals,    best    Yorkshire    (Silkstone) 
House,  pit  head  price .  per  ton 

Copper  (standard) per  ton 

Tin  (standard) per  ton 

Lead  (English) per  ton 

Wheat (Gazette) 

Barley (Average 

Oats (per  qr. 

Mutton  (prime) per  8  lbs. 

Sugar  (West  India) per  cwt. 

Coffee  (Santos) per  cwt. 

Tea  (common) per  lb. 

Rice per  cwt. 

Cotton  (middling) per  lb. 

32's  twist per  lb. 

Tallow per  cwt. 

Hemp  (Manilla) per  ton 

Silk  (Canton) per  lb. 

Jute per  ton 

Flax per  ton 

Petroleum per  7  lbs. 

Rubber  (fine  hard  Para)  per  lb. 


■  Broken  and  Fannings. 

1  The  Economist,  April  6,  1918,  p.  564. 


I9I4 

1915 

1916 

1917 

1918 

51/3 

67/3 

90/ 

87/6 

95/, 

130/ 

150/ 

217/6 

225/ 

237/6 

13/3 

18/ 

18/3 

19/ 

24/ 

£65 

£69  1/8 

£116 

£i36i 

£iioi 

£1745/8  £i7ii 

£199 

£2147/8  £316 

£193/4 

£24 

£36 

nom. 

£29 

31/4 

54/6 

53/6 

81/5 

72/3 

25/7 

31/9 

53/8 

71/10 

56/9 

18/8 

30/6 

30/5 

51/10 

50/3 

7/6 

8/ 

9/6 

10/6 

9/6 

11/6 

nom. 

nom. 

40/ 

44/6 

49/9 

52/6 

52/ 

5d. 

9^d. 

7id. 

"^iGd. 

''I9d. 

7/7i 

12/ 

16/9 

26/6 

26/3 

7.o8d. 

5.48d. 

7.83d. 

I2.82d. 

24.76d. 

"ltd. 

8id. 

i2  3/8d 

.  17  3/8d, 

.  42id. 

32/3 

37/6 

48/6 

57/6 

70/6 

£27 

£41 

£56 

£96 

£100 

13/ 

11/6 

17/3 

17/9 

24/ 

£33^ 

£22i 

£34 

£43 

f43 

£28^ 

nom. 

nom. 

£94 

£147 

8d. 

8^d. 

iid. 

I4d. 

19. 5d. 

3/ 

2/5^ 

3/oi 

3/ii 

2/9  3/4 

GREAT    BRITAIN 


175 


The  following  table  shows  the  growth  in  the  national  debt 
of  Great  Britain  during  the  war  period,  and  the  means  by 
which  the  money  has  been  obtained,  as  accurately  as  can  be 
traced  from  the  weekly  statements  of  income  and  expendi- 
ture and  other  sources  of  information:^ 


(In  million  pounds) 

Aug.       Mar.      Mar.      Mar.  Mar.  Apr. 

I.     31,    31.    31,  31.  27, 

1914   1915   1916   1917  1918  1918 


Funded  debt 

Term  annuities .... 
3§%  War  stock 
45%  War  stock 
4  &  5%  war  stock 
Nat.  war  bonds 
Treasury  bills.  .  . 
Excheq.  bonds .  . 
War  savings  crts 
War  expend.  Do 

Other  debt 

American  loan .  . 
Temp,  advances 


(LI 

Q 

-o 

c 

3 

c 


586.7 

29.6 


15-5 
20.5 


1 .0 


583.3 
28.0 

349  I 


77.2 
67.4 


318.5     317.8  317.8  317 

26.1       24.0  24.0  24 

62  . 8       62 . 7  62  . 7  62 

900.0       20.0  20.0  20 

1 ,962  . 4  2,073  •  o  2 ,068 

614.2  680 

566.8     463.7  972.6  953 

177.0     320.3  414.6  414 

1.4       74.5  136.7  145 

23.6  22.9  22 

9.2     316.5  936.9  973 

51.4       51.4  51.4  51 

19.9     217.5  192.2  261 


653 -3  1,105.02,133 
Other  cap.  liabilities .  .        57.2       57.0       56 


13,854.45,839.05,996 
7       52.2       51.2       51 


Change 

Since 

Aug.  I, 

1914 

-268.9 

-5-6 

+62.7 

+20.0 

+2,068.4 

+680.7 

+937-9 

+394-1 

+  145-9 

+22.9 

+973-3 

+51-4 

+260.7 


8  +5,343-5 
o         —6.2 


Total  liabilities  ....     710. 51, 162. 02, 189. 8  3,906.6  5,890.2  6,047.8  +5,337.3 
1  The  Economist,  May  4,  1918,  p.  698. 


176  PRICES    AND    PRICE    CONTROL    DURING   THE   WAR 


ACREAGE  UNDER  CROPS  AND  NUMBER  OF  LIVE  STOCK  IN  THE 
UNITED   KINGDOM,    1914-19171 

1914  1915  1916  ^1917 

Acres 
Total  area  (excluding  water) ....  76,455.391 

Total  acreage   under   crops  and 

grass 46,763,816  46,675,407  46,687,512  46,208,314 

Arable  land 19,414,166  19,346,593  19,499,475  19,652,251 

Permanent  grass 27,349,650  27,328,814  27,188,037  26,556,063 

Wheat 1,905,933  2,335,091  2,053,568  2,103,704 

Barley  or  here 1,873,280  1,524,316  1,653,376  1,797,149 

Oats 3,899,074  4,182,296  4,171,353  4.761,588 

Rye 66,890  60,040  65,971  69,399 

Beans 301,488  273,016  242,803  218,502 

Peas 169,938  130,307  113.474  131.944 

Potatoes 1,209,150  1,214,458  1,155,404  1,365,148 

Turnips  and  swedes 1,760,629  1,625,589  1,623,161  1,679,676 

Mangold 516,893  499,804  461,823  484,466 

Kohi-rlbi." .■.■■.■;;:::;;.■:;.;:;:}    ^92,145    184.584    183,346    151.450 

Vetches  or  tares I37,75i  123,657  102,629  93,247 

Lucerne ....  ....  ....  50,226 

Hops 36,661  34,744  31.352  16,950 

Small  fruit 101,083  97,438  96,250  95.777 

Clover,  sainfoin  and  grasses  under 

rotation 6,606,046  6,462,279  6,763,01 1  5,994,450 

Other  crops 288,673  282,104  351.459  275,672 

Bare  fallow 348,532  316,870  430,494  362,015 

*The  figures  for  the  United  Kingdom  for  1917  do  not  include  the  Channel 
Islands. 

^  Journal  of  the  Royal  Statistical  Society,  January,  1918,  p.  59. 


GREAT    BRITAIN  1 77 


NUMBER  OF  LIVE   STOCK   IN   THE  UNITED   KINGDOM  1 

1914  1915  1916  1917 
No.  No.  No.  No. 
Horses  used  for  agricultural  pur- 
poses           1,326,783  1,224,055  1,294,664  1,320,894 

Stallions ...."  ...."  ....^  » 

Unbroken     f  One  year  and  above            351,794  320,542  346,962  375,308 

horses       \  Under  one  year ..  .             172,465  167,261  192,589  174,568 

Total 1,851,042  1,711,858  1,834,215  1,870,770 

Other  horses ^  ^  ''  ^ 


Total  of  horses ....  ....  ....  .... 

Cows  and  heifers  in  milk 1       ,  » ,  .  ^,_     .  ^--0  ^._      ,  ^,  ,  ^q^     _  ^„q  /;,« 

Cows  in  calf  but  not  in  milk..../      4-144,937     4,o68,9o7     4,034,382     3,998,642 

Heifers  in  calf 450,191        425,793        464,939        498,881 

Other      f  Two  years  and  above .  .         2,330,200     2,221,218     2,344,667     2,297,825 

„„^^i„j  One  year  and  under  two         2,596,988     2,665,551     2,801,698     2,747,444 

[  Under  one  year .....  .  2,662,189     2,789,933     2,805,854     2,762,588 

Total  of  cattle 12,184,505  12,171,452  12,451,540  12,342,268 

Ewes  kept  for  breeding 11,255,727  11,341,904  11,603,904  11,405,015 

Other      /  One  year  and  above  .  .         5,042,321     5,397,745     5,576,513     5,474-331 

sheep\  Under  one  year 11,665,929  11,536,321   11,669,238  10,841,761 

Total  of  sheep 27,963,977  28,275,970  28,849,655  27,770,555 

Sows  kept  for  breeding 494-736       439,290       434-464       373-096 

Other  pigs 3-457-879  3-355-841     3,181,427     2,624,561 

Total  of  pigs 3,952,615    3,355,131     3,615-891     2,998,657 

*  Stallions  are  included  in  unbroken  horses. 
^  No  figures  given  for  "Other  horses." 

ESTIMATED    CROPS   OF   THE    UNITED    KINGDOM,    1914-1917^ 

1914  1915  1916  1917 

Qrs.  Qrs.  Qrs.  Qrs. 

Wheat 7,804,041     9-239-355     7,471-884     8,040,000 

Barley 8,065,678     5,862,244     6,612,550     7,189,000 

Oats 20,663,537  22,308,395  21,333,782  26,023,000 

Beans 1,120,078        924,155        892,572        474-000 

Peas 374,038        300,338        261,090       278,000 

Tons  Tons  Tons  Tons 

Potatoes 7,476,458     7,540,240    5,468,881     8,603,000 

Turnips  and  swedes 24,195,755  24,431,083  23,318,170  24,841,000 

Mangolds 9,522,921     9,696,192     9,009,752  10,369,000 

"Seeds"  hay 4,210,924     4,526,192     5,487,369     4,734,000 

"Meadow"  hay 8,192,555     7,922,591     9-710,503     8,424,000 

1  Journal  of  the  Royal  Statistical  Society,  January,  1918,  p.  61. 
^  Journal  of  the  Royal  Statistical  Society,  January,  1918,  p.  62. 


PART  II 
THE  UNITED  STATES 


CHAPTER   I 
Movement  of  Prices  during  the  War 

Wholesale  Prices 

The  various  index  numbers  of  wholesale  prices  constructed  in 
the  United  States  all  tell  substantially  the  same  story.  Gen- 
eral prices  remained  comparatively  stationary  during  the  first 
year  and  a  half  of  the  war  and  then  they  began  to  advance, 
rising  to  new  heights  with  each  succeeding  month,  the  only 
exception  being  the  latter  part  of  191 7,  when  the  upward 
trend  was  temporarily  checked  because  of  governmental 
regulation.  Taking  the  most  comprehensive  of  the  index 
numbers,  that  of  the  United  States  Bureau  of  Labor  Statis- 
tics, one  finds  that  price  fluctuations  in  the  United  States 
since  191 3  were  as  follows:' 

INDEX  NUMBERS  OF  WHOLESALE  PRICES,   BY  GROUPS  OF  COM- 
MODITIES AND   BY  YEARS,    1913  TO   1916,  AND   BY  YEARS 
AND   MONTHS,    1917   AND    1918 
(1913=100) 

to  u  -i  -Si 

o  3       tn  m        sq       .t: 

I    i  li  vs  s£  S|  11  11  I    i 


YearandMonth           £  ^  ^.S  "g.S  "^Z  ^S  S.y  feg  i  5 

£  o  ^^  -Z.^  ^^  £5  g^  3  b«  .^  ^ 

£  -^  D^  ^^  1^  ^«  Q^  K-S  ^  ^ 

Average  for  19 1 3 100  100  100  100  100  100  100  100  100  100 

Average  for  19 1 4 103  103  98  92  87  97  103  103  97  99 

Average  for  19 1 5 105  104  100  87  97  94  113  loi  98  100 

Average  for  19 1 6 122  126  127  115  148  loi  143  no  120  123 

Average  for  19 1 7 188  177  181  169  208  124  185  155  153  175 

1917 

January 147  150  161  170  183  106  144  128  137  150 

February 150  160  162  178  190  108  146  129  138  155 

March 162  161  163  181  199  ill  151  129  140  160 

April 180  182  169  178  208  114  155  151  144  171 

May 196  191  173  187  217  117  164  151  148  181 

June 196  187  179  193  239  127  165  162  153  184 

July 198  180  187  183  257  132  185  165  151  185 

August 204  180  193  159  249  133  198  165  156  184 

September 203  178  193  155  228  134  203  165  155  182 

October 207  183  194  142  182  134  242  165  164  180 

November 211  184  202  151  173  135  232  175  165  182 

December 204  185  206  153  173  135  230  175  166  181 

'  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  February-,  1918,  p.  16;  March, 
1919,  p.  115. 

181 


1 82  PRICES   AND    PRICE    CONTROL    DURING    THE    WAR 

INDEX   NUiMBERS  OF  WHOLESALE    PRICES— Continued 
191S 

January 205  188  209  169  173  136  216  188  178  185 

February 207  186  213  171  175  137  217  188  181  187 

March 211  178  220  171  175  142  217  188  184  187 

April 217  179  230  170  176  145  214  188  193  191 

May 212  178  234  172  177  147  209  188  197  191 

June 214  179  243  171  177  148  205  192  199  193 

July 221  185  249  178  183  153  202  192  192  198 

August 229  191  251  178  183  156  207  227  191  202 

September 236  199  251  179  183  158  206  233  195  207 

October 223  199  253  179  186  157  204  233  197  204 

November 219  203  253  182  186  163  201  233  207  206 

December 221  207  246  183  183  163  182  233  204  206 

An  analysis  of  the  figures  shows  that  prices  in  19 18  were  almost 
double  those  in  1913 ;  the  highest  level  was  reached  in  Septem- 
ber, 1918,  when  the  index  number  stood  at  207;  it  declined  to 
204  in  October,  but  rose  again  to  206  during  the  next  month. 
Taking  commodities  by  groups  into  which  they  are  classified 
by  the  Bureau  of  Labor  Statistics,  one  finds  that  the  average 
index  numbers  increased  from  1913  to  November,   191 8,  in 
the  case  of  farm  products  119  per  cent;  food,  etc.,  103  per 
cent;  cloths  and  clothing  153  per  cent;  metals  and  metal  prod- 
ucts 86  per  cent;  lumber  and  building  materials  63  per  cent; 
chemicals  and  drugs  loi  per  cent;  house  furnishing  goods  133 
per  cent;  miscellaneous  group  (including  such  articles  as  cot- 
tonseed meal  and  oil,  newsprint  and  wrapping  paper,  rubber, 
tobacco,  whiskey  and  wood  pulp)  107  per  cent. 

An  interesting  and  suggestive  table  of  index  numbers  is 
/j  contained  in  the  Federal  Reserve  Bulletin  for  October,  1918. 
The  numbers  were  constructed  according  to  the  method 
adopted  by  the  Bureau  of  Labor  Statistics,  but  with  a  different 
grouping  of  the  commodities  included.  The  grouping  chosen 
comprises  (i)  raw  materials,  including  subgroups  of  farm,  an- 
imal, forest  and  mineral  products;  (2)  producers'  goods,  such 
as  steel  rails,  copper  wire  and  cotton  yarn,  and  (3)  consumers' 
goods,  such  as  flour,  beef  and  cotton  textiles.  The  classifica- 
tion was  made  as  far  as  possible  in  accordance  with  the  prin- 
cipal use  of  the  commodity,  since  certain  articles  are  used 
bo_th  by  producers  and  consumers  and  since  it  is  often  difficult 
to  distinguish  between  raw  materials  and  producers'  goods.' 

'  Monthly  Labor  Review,  December,  191 8,  p.  147. 


THE    UNITED    STATES 


183 


The  movement  of  wholesale  prices  in  the  United  States  since 
1914,  according  to  this  tabulation  was: 

Average  for  1913  =  100 


Year  and  Month  2 

u 

3 

is 
&^ 

Average  for  1914 103 

Average  for  19 15 in 

Average  for  19 16 128 

1917 

Average  for  year 210 

January l6l 

February 157 

March 169 

April 198 

May 225 

June 227 

July 230 

August 232 

September 214 

October 227 

November 238 

December 233 

1918 

January 240 

February 242 

IVIarch 249 

April 243 

May 226 

June 232 

July 237 

August 246 


Raw  Materials 

ties 

tics 
)er) 

CO 

0) 

4-* 

CQ 

4-> 

£ 

All  Commodi 
(Bureau  of 
Labor  Statis 
Index  Numh 

■3| 

■=a; 

o;  0 
^-  i-i 

Is 

Total 
Raw 
Mafls 

11 

3-0 
cfi  0 

c  0 

104 

97 

90 

99 

95 

lOI 

99 

100 

93 

91 

99 

100 

102 

100 

119 

96 

123 

118 

140 

123 

123 

169 

118 

179 

173 

187 

172 

175 

136 

99 

175 

147 

166 

147 

150 

145 

100 

i«5 

151 

168 

155 

155 

156 

103 

191 

160 

171 

156 

160 

163 

105 

189 

169 

181 

172 

171 

168 

108 

196 

180 

189 

179 

181 

166 

120 

205 

i«5 

199 

178 

184 

168 

126 

198 

187 

212 

174 

185 

181 

128 

175 

i«3 

211 

175 

184 

195 

129 

167 

181 

203 

175 

182 

190 

129 

150 

178 

i«5 

181 

180 

187 

129 

157 

182 

181 

183 

182 

178 

129 

15H 

178 

180 

185 

181 

174 

130 

171 

183 

181 

192 

185 

176 

131 

172 

184 

184 

193 

187 

178 

135 

172 

187 

187 

189 

187 

193 

137 

170 

190 

190 

193 

191 

201 

13H 

173 

189 

192 

194 

191 

198 

13S 

171 

189 

194 

197 

193 

209 

140 

180 

196 

196 

202 

198 

215 

143 

180 

200 

199 

205 

203 

The  rise  in  wholesale  prices  of  individual  commodities  from 
July,  1914,  to  July,  1918,  was:' 

WHOLESALE  PRICES   IN  JULY,    1914,    1915,    1916,    1917  AND    1918,   AS 
COMPARED    WITH    AVERAGE    PRICES   IN    1913 
(Actual  Money  Prices) 

July 
Article  Unit 

1913   1914   1915   1916    1917    1918 

FOODSTUFFS 

(a)  Animal 
Cattle,       good       to 

choice  steers 100  lbs.        $8,507  $9,219  $9,213  $9,985  $12,560  $17,625 

Beef,     fresh,      good 

native  steers Lb.  .130        .135        .132        .141  .164  .240 

Beef,  salt,  extra  mess  Bbl.  18.923   17.250  17.500   18.250     30.500     34.875 

Hogs,  heavy 100  lbs.  8.365     8.769     7.281     9.825     15460     17.720 

1  Monthly  Labor  Review,  September,  19 18,  pp.  102-103. 
13 


1 84  TRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

Continued 


WHOLESALE   PRICES   IN  JULY,   1914-18 
Bacon,    short    clear 


siiles Lb. 

Hams,  smoked,  loose  Lb. 

Lard,  prime,  con- 
tract   Lb. 

Pork,  salt,  mess.  .  .  .Bbl. 

Sheep,  ewes 100  lbs. 

Mutton,  dressed  .  .  .Lb. 

Butter,  creamery 
extra Lb. 

Eggs,  fresh,  firsts .  .  .  Doz. 

Milk Qt. 

(b)    Vegetable 

Wheat,  No.  i  north- 
ern   Bush. 

Wheat  flour,  stand- 
ard patent Bbl. 

Corn,  No.  2,  mixed.  Bush. 

Corn  meal 100  lbs. 

Oats,  standard,  in 
store Bush. 

Rje,  No.  2 Bush. 

Rye  flour,  pure,  me- 
dium straight.  .  .  .Bbl. 

Barley,  fair  to  good, 
malting Bush. 

Rice,  Honduras, 
head Lb. 

Potatoes,  white.  .  .  .  Bush. 

Sugar,  granulated  .  .  Lb. 

TEXTILES  AND 
LEATHER  GOODS 

Cotton,  upland,  mid- 
dling  Lb. 

Cotton  yarn,  carded, 
lo/i Lb. 

Sheeting,  brown, 
Pepperell Yd. 

Bleached  muslin, 
Lonsdale Yd. 

Wool,  1/4  and  3/8  grades, 
scoured Lb. 

Worsted  yarn,  2/32's  Lb. 

Clay  worsted  suit- 
ings, 16-0Z Yd. 

Storm  serge,  all- 
wool,  50-in Yd. 

Hides,  packers', 

heavy  native  steers  Lb. 

Leather,  chrome  calf  Sq.  ft. 

Leather,  sole,  oak  .  .  Lb. 

Shoes,  men's,  Good- 
year welt,  vici  calf, 
blucher Pair 

Shoes,  women's, 

Goodyear       welt, 
gun  metal,  button  Pair 


,127 
.166 


.141 

.177 


,111 
.161 


•  157 
.190 


.110   .102   .081   .131 

22.471  23.625  18.500  27.167 

4.687  4.538  5.469  6.545 

.103   .095   .109   .131 


42 


.310 
.226 
•035 


4  584 

.625 

1-599 

•376 
.636 

3  123 
•  625 

.051 
.614 
•043 


.270 
.187 
.030 


.261 
.  169 
.030 


.276 
.223 
•  031 


248 
240 

201 
250 
600 
145 

376 
318 
050 


•594 
.710 
.780 

7.031  6. 

•783   • 
1.750  I. 

•369 
.618 

•529 
1.036 

•975 

5388  5^ 

•533 

•743   • 

•054 
.206 
.042 

.049 

•444 
■  058 

.128 

•  131   • 

.221 

.215 

•073 

.070 

.082 

.085   . 

.471 

•777 

•444 
.650 

.382 

1.328  I. 

•563 

■505 

.184 
.270 
•449 

.194 

•275   • 
•475  ■' 

092 
160 
060 

075 

557 
850 

508 

539 

258 
280 
495 


100 

808 
982 

405 
966 

150 
746 

045 
863 

075 


.130 

•253 

.078 

.088 

.686 
1 .  100 

2  .000 

.760 

.270 
.460 
•635 


12.750 
2.044 

4.880 

.764 
2.226 

II  .620 

I  391 

.070 

2^375 

•075 


.261 

•450 

.140 

.160 

1 .200 
1 .600 

3  250 

1 .176 

•330 
•540 
.815 


3. 113  3.150  3.250  3.750   4.750 


2.175     2.260     2.350     2.750       3.500 


48 
10 


276 
303 

264 
500 

975 
205 

432 
374 
054 


.874   .897  1.390  1. 1 70   2.582   2.247 


10.702 
1.665 

4.825 

•765 
I  705 

9  425 
1. 125 

.094 

1^035 
.074 


.312 
.640 

.250 

I  437 
2.150 

4  450 
1.470 

•330 
.640 
•  830 

5  500 
4  500 


THE    UNITED    STATES 


185 


WHOLESALE   PRICES   IN   JULY,    1914-18— Continued 


MINERAL    AND 

METAL    PRODUCTS 

Coal,         anthracite, 

chestnut 2240  lbs. 

Coal,        bituminous, 

run  of  mine 2000  lbs. 

Coke,  furnace, 

prompt 2000  lbs. 

Copper,  electrolytic  Lb. 
Copper    wire,    bare. 

No.  8 Lb. 

Pig  iron,  Bessemer  .  2240  lbs. 

Steel  billets 2240  lbs. 

Tin   plate,   domestic 

coke 100  lbs. 

Pig  tin Lb. 

Pig  lead Lb. 

Spelter Lb. 

Petroleum,  crude.  .  .Bbl. 
Petroleum,     refined, 

water- white GaL 

Gasoline,  motor.  .  .  .Gal. 


5.313     5.241     5.200     5.507       5.933       6.693 


17 

25 


200  2 . 200  2 . 200  2 . 200   5 . 000 


538 
157 


;.ooo 
•134 


■750 
.199 


■750 
.265 


1 5 .  000 
.318 


167  .148  .210  .325  .338 
133  14.900  14.950  21.950  57  450 
789  19.000  21.380  41.000  100.000 


558 

449 
044 
058 

450 


3  350 
•311 
■039 
.051 

I  750 


123   .120 
168   .140 


3175 
■391 
.058 
.220 

I -350 

.  120 
.  120 


5-875 
■389 
.069 

113 

2  .600 

.  120 
.240 


12.000 
.620 
.114 

•093 
3.100 

.120 
.240 


36 
47 


750 

000 
254 

285 
600 
500 

750 

930 
080 
088 
000 

171 
241 


It  may  be  seen  from  the  table  that  a  great  many  commodi- 
ties more  than  doubled  in  price.  Conspicuous  examples  are 
wheat,  wheat  flour,  corn  and  corn  meal,  oats,  rye,  cattle,  hogs, 
bacon,  lard,  pork,  cotton  and  cotton  yarn,  wool  and  worsted 
yarn,  leather,  coke  and  pig  iron. 

In  October,  191 8,  a  number  of  commodities  averaged  less 
than  in  July  of  the  same  year.'  A  decided  drop  in  price  took 
place  in  the  case  of  barley,  corn  and  corn  meal,  rye  flour, 
sheep,  mutton  and  salt  pork.  Smaller  decreases  were  shown 
for  rye,  wheat  flour,  potatoes,  hides  and  leather,  cotton  yarn 
and  pig  tin. 

On  the  other  hand,  increases  between  July  and  October 
took  place  in  the  prices  of  bacon,  ham,  butter,  eggs,  milk, 
white  cotton,  hogs,  cattle,  fresh  beef,  wheat,  sugar,  shoes, 
copper,  pig  lead  and  spelter.  For  wool,  coal,  coke,  pig  iron, 
steel  billets,  tin  plate,  crude  and  refined  petroleum  and  gaso- 
line, the  price  in  October  was  practically  the  same  as  in  July. 

Very  valuable  records  of  the  movement  of  wholesale  prices 
have  been  gathered  by  the  Price  Section  of  the  Division  of 
Planning  and  Statistics  of  the  War  Industries  Board.     The 


'  Monthly  Labor  Review,  December,  1918,  p.  no. 


1 86  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

grouping:  of  commodities  made  by  the  board  is  somewhat 
different  from  that  of  the  Bureau  of  Labor  or  of  the  Federal 
Reser\-e  Board;  the  commodities  are  classified  under  seven 
major  groups — food;  clothing;  rubber,  paper,  and  fiber; 
metals;  building  materials;  fuel,  and  chemicals.  The  quota- 
tions recorded  by  the  Price  Section  are  averages  of  prices 
taken  at  monthly  or  weekly  intervals  from  the  leading  trade 
journals,  from  government  bureaus,  particularly  the  Bureau 
of  Labor  Statistics,  and  from  private  sources.  In  order  to 
make  possible  a  comparison  of  price  fluctuations  of  different 
commodities  during  the  war,  relative  prices  on  a  fixed  base 
have  been  figured  to  correspond  to  each  actual  quotation. 
These  relative  prices  were  made  to  represent  the  percentages 
of  rise  or  fall  of  the  actual  prices  from  the  level  for  the  year 
immediately  preceding  the  outbreak  of  the  European  war 
(July  I,  1913,  to  June  30,  1914)- 

The  first  bulletin  containing  monthly  quotations  and  aver- 
age prices  was  issued  by  the  War  Industries  Board  in  October, 
191 8;  it  considers  88  commodities. 

Data  showing  the  effect  of  governmental  price  fixing  upon 
the  trend  of  wholesale  prices  are  contained  in  a  bulletin  "Fluc- 
tuations of  Controlled  and  Uncontrolled  Prices,"  which  the 
War  Industries  Board  issued  in  December,  1918.  As  pointed 
out  in  this  bulletin,  a  comparison  could  be  made  much  more 
easily  if  all  of  the  controlled  commodities  had  been  brought 
under  regulation  at  the  beginning  of  the  price  fixing  period, 
for  then  the  list  of  controlled  commodities  would  have  re- 
mained constant  and  furnished  a  definite  basis  for  construct- 
ing an  index  number  to  measure  the  price  changes.  The  fact 
that  price  control  was  extended  gradually  made  it  necessary 
to  resort  to  two  methods  of  comparison.  The  first  method 
uses  an  index  number  based  on  the  list  of  controlled  commodi- 
ties as  it  stood  in  September,  191 8,  and  compares  the  relative 
movement  of  controlled  and  uncontrolled  prices  from  August, 
1916,  to  that  date.  It  necessarily  treats  some  commodities 
as  controlled  before  they  were  actually  under  control.  In 
the  second  method  the  prices  of  commodities  under  control 


THE    UNITED    STATES 


187 


in  any  given  month  are  compared  with  the  prices  of  the  same 
commodities  in  the  previous  month  and  the  percentage  of 
change  is  indicated.  This  month  to  month  comparison  per- 
mits price  fixed  commodities  to  be  kept  strictly  in  date  with 
price  fixing. 

In  the  following  table  the  index  number  of  controlled  prices 
is  constructed  from  the  prices  of  78  commodities  which  by 
September,  1918,  had  come  under  control.  The  index  number 
of  uncontrolled  prices  is  built  on  quotations  for  193  commodi- 
ties. In  both  cases  the  commodities  used  are  those  repre- 
sented in  the  Bureau  of  Labor  Statistics  Index  Number  of 
Wholesale  Prices.' 

INDEX    NUMBERS   OF   ALL    COMMODITIES 


J^ 

AVERAGE    PrK 

:es  Augus 

iT,    I916-J 

ULY,    1917  = 

=  100 

Controlled  Uncontrolled  Total 

Controlled  Uncontrolled  Total 

Prices 

Prices 

Prices 

Prices 

I9I6 

I917 

Aug. 

74 

83 

79 

Aug. 

119 

118 

119 

Sept. 

77 

86 

82 

Sept. 

III 

121 

117 

Oct. 

83 

88 

86 

Oct. 

103 

125 

116 

Nov. 

91 

93 

92 

Nov. 

104 

127 

117 

Dec. 

96 

93 

94 

Dec. 

104 

126 

116 

igi7 

IQ18 

Jan. 

98 

96 

97 

Jan. 

106 

128 

119 

Feb. 

99 

lOI 

100 

Feb. 

107 

129 

119 

March 

103 

103 

103 

March 

107 

129 

120 

April 

III 

no 

III 

April 

108 

133 

122 

May 

112 

113 

117 

May 

109 

133 

122 

June 

123 

116 

119 

June 

109 

135 

123 

July 

123 

117 

119 

July 

III 

140 

128 

Aug. 

no 

145 

130 

Sept. 

112 

151 

134 

The  next  table  shows  the  extent  to  which  price  fixing  had 
progressed  in  the  several  groups  of  commodities  in  September, 
1918,  the  relative  importance  of  the  controlled  and  uncon- 
trolled commodities  being  measured  by  their  aggregate  values 
in  exchange. 2 

*  War  Industries  Board,  Fluctuations  of  Controlled  and  Uncontrolled  Prices,  p.  8. 
2  Ibid.,  p.  3. 


t88 


PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 


EXTENT  OF   PRICE   FIXING   IN   SEPTEMBER,    1918 

Relative 
Importance 
Con- 
trolled 


Group 


Number  of 
Commodities 
Con-      Uncon- 
trolled     trolled 


All  Commodities 

Group  I— Farm  Products 

Group  1 1— Food,  etc ■  • 

Group  III— Cloths  and  Clothmg 

Group  IV— Fuel  and  Lighting 

Group  V— Metals  and  Metal  Products. 
Group  VI— Lumber  and  Building  Mate- 
rials  -.  •• 

Group  VII — Drugs  and  Chemicals  .  .  .  . 
Group  VIII— House-furnishing  Goods  . 
Group  IX— Miscellaneous 


78 
8 

10 

18 
8 

19 

9 
2 
o 

4 


193 
22 

77 

34 

6 

6 

21 

7 

5 

15 


39 
18 
28 
41 
63 
83 

55 

7 

17 


7% 
04% 

22% 

35% 
44% 
33% 


Uncon- 
trolled 

61.30% 
81  .96% 
71  78% 
58.65% 
36.56% 
16.17% 


71%       44-29% 

95%      92.05% 

100.00% 

40%       82.60% 


Controlled 

Uncontrolled 

Total  for 

Prices 

Prices 

Group 

112 

151 

134 

107 

168 

152 

112 

131 

125 

165 

147 

154 

99 

138 

no 

92 

130 

96 

132 

159 

143 

94 

152 

145 

0 

145 

145 

131 

169 

142 

The  average  prices  of  commodities  by  groups  rose  by  Sep- 
tember, 1 91 8,  as  follows: 

■   INDEX  NUMBERS,   SEPTEMBER,    1918 
Average  Prices  August,  1916-JuLY,  1917=100 

Group 

All  Commodities 

Group  I— Farm  Products 

Group  1 1 — Foods 

Group  III— Cloths  and  Clothing 

Group  IV — Fuels  and  Lighting 

Group  V — Metals  and  Metal  Products . 
Group  VI — Lumber  and  Building  Mate- 
rials   • 

Group  VII — Drugs  and  Chemicals.  .  .  . 
Group  VIII — House-furnishing  Goods  . 
Group  IX — Miscellaneous 

Retail  Prices 

Reports  of  retail  prices  of  food  collected  by  the  Bureau  of 
Labor  Statistics  for  June  15,  1914,  and  for  subsequent  dates, 
show  the  movement  of  these  prices  as  afifected  by  the  war.  ^ 
As  the  table  opposite  indicates,  the  price  of  food  as  a  whole  in 
June,  1915,  was  not  higher  than  in  June,  1914;  the  increase 
over  June,  1913,  was  2  per  cent;  in  June,  1916,  the  price  was 
13  per  cent  higher  than  in  June,  19 14.  The  greatest  advance 
took  place  during  the  latter  part  of  191 6  and  the  early  months 
of  1917.  The  result  of  this  was  an  increase  in  June,  1917. 
of  55  per  cent  over  the  June,  19 14,  price;  an  additional  rise  of 

'  Monthly  Labor  Review,  August,  1918,  p.  115. 


THE    UNITED    STATES 


189 


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TRICES   AND    PRICE    CONTROL    DURING    THE    WAR 


73  per  cent  occurred  from  June,  1917,  to  June,  1918,  bringing 
the  total  up  to  66  per  cent.  In  November,  19 18,  a  few  days 
after  the  conclusion  of  the  armistice,  the  prices  of  all  articles 
of  food  combined  were  75  per  cent  higher  than  in  November, 
1913.'  If  one  considers  the  rise  of  individual  commodities, 
one  finds  that  in  the  five  year  period  from  June,  1913,  to  June, 
1 918,  lamb  increased  93  per  cent,  lard  106  per  cent,  and  corn 
meal  139  per  cent.  The  increase  for  flour  was  145  per  cent 
in  1917,  and  103  per  cent  in  1918;  however,  the  fluctuation 
in  the  price  of  flour  was  not  as  great  as  in  the  case  of  potatoes, 
which  showed  an  increase  of  256  per  cent  in  June,  191 7,  and 
only  61  per  cent  in  June,  1918.  The  rise  in  the  price  of  meats 
varied  from  65  per  cent  for  sirloin  steak  to  82  per  cent  for 
round  steak  and  87  per  cent  for  bacon.  Sugar  rose  72  per 
cent,  bread  74  per  cent,  eggs  55  per  cent,  butter  45  per  cent, 
and  milk  44  per  cent. 

To  enable  the  reader  to  follow  the  percentage  changes  in 
prices  more  readily,  the  money  prices  of  16  articles  of  food 
have  been  reduced  by  the  Bureau  of  Labor  Statistics  to  rela- 
tive prices,  the  price  of  each  article  having  been  weighted 
according  to  the  quantity  consumed  in  the  average  working 
man's  family.  The  relative  figures  are  based  on  the  average 
price  for  the  year  1913.^ 

RELATIVE   RETAIL   PRICES  ' 

Article  Unit 

Sirloin  steak Pound 

Round  steak 

Rib  roast 

Pork  chops 

Bacon 

Ham 

Lard 

Hens 

Eggs Dozen 

Butter Pound 

Milk Quart 

Bread i6-oz.  loaf 

Flour Pound 

Cornmeal " 

Potatoes " 

Sugar " 


FOO 

D  ON 

JUN 

E  15, 

1913- 

1918 

1913 

1914 

1915 

1916 

1917 

1918 

102 

103 

103 

113 

129 

168 

lOI 

106 

105 

117 

135 

182 

102 

103 

103 

113 

132 

169 

99 

103 

98 

no 

148 

177 

lOI 

100 

99 

107 

158 

191 

102 

100 

97 

119 

145 

170 

100 

97 

95 

130 

177 

208 

103 

103 

98 

114 

136 

177 

92 

88 

90 

95 

123 

133 

99 

100 

98 

99 

119 

146 

100 

no 

126 

124 

170 

174 

lOI 

99 

130 

117 

246 

203 

98 

103 

109 

108 

182 

223 

104 

132 

99 

167 

366 

171 

97 

93 

126 

158 

170 

165 

All  articles  combined . 


98 

'  Monthly  Labor  Review,  January,  1919,  p.  89. 
*  Ibid.,  August,  1918,  p.  1 16. 


99 


100 


112 


152   162 


THE    UNITED    STATES  1 91 

Retail  prices  vary  considerably  between  different  cities 
and  it  is  almost  impossible  to  arrive  at  any  fair  comparison 
of  prices  between  such  places,  for  instance,  as  New  York  and 
Denver,  or  Chicago  and  San  Francisco.  Qualities  and  market 
conditions  vary,  and  the  grades  differ  not  only  from  city  to 
city  but  also  from  store  to  store  within  the  same  city  and 
often  from  month  to  month  within  the  same  store.'  This  is 
true  not  only  of  food  products  but  also  of  other  commodities 
offered  for  sale. 

A  very  pronounced  increase  in  retail  prices  of  dry  goods  in 
different  cities  took  place  between  October  15,  191 7,  and 
October  15,  191 8.  A  table  prepared  by  the  Bureau  of  Labor 
Statistics  gives  the  average  retail  prices  of  ten  dry  goods  on 
these  two  dates.  It  shows  that  the  price  of  calico  rose  from 
13.9  cents  to  26.4  cents  in  New  York;  from  10.8  cents  to  25 
cents  in  Atlanta;  from  13  cents  to  35  cents  in  Baltimore;  from 
14.2  cents  to  20.4  cents  in  Salt  Lake  City,  etc.;  the  price  of 
percale  advanced  from  20.8  cents  to  42.4  cents  in  New  York; 
from  24.3  cents  to  40  cents  in  Atlanta;  from  23  cents  to  40.9 
cents  in  Baltimore,  and  from  23.8  cents  to  42.4  cents  in  Salt 
Lake  City.^ 

Information  secured  by  the  National  Industrial  Conference 
Board  from  112  stores  in  46  cities  throughout  the  country 
indicated  that  average  prices  of  common  articles  of  wearing 
apparel  had  advanced  since  July,  1914,  to  November,  1918, 
all  the  way  from  64  per  cent  in  the  case  of  women's  blouses  to 
185.7  per  cent  in  the  case  of  men's  overalls.^  Men's  and 
women's  coats  which  were  selling  for  $10  in  19 14  cost  from  $19 
to$2oin  November,  1918.  Prices  of  knit  underwear  advanced 
nearly  130  per  cent.  There  was  an  increase  of  68  per  cent 
in  the  price  of  men's  shoes  and  of  90.5  per  cent  in  that  of 
women's  shoes.  Men's  shirts  which  cost  $1  in  1914  were  sell- 
ing at  $1.80  in  November,  1918;  the  price  of  women's  aprons 

1  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  February,  191 8,  p.  3. 

^  Monthly  Labor  Review,  December,  1918,  pp.  101-104.  Contains  tables  giving 
retail  prices  of  dry  goods  in  45  cities. 

'  Industrial  News  Survey,  Cost  of  Living  Supplement,  December  30,  191 8- 
January  6,  1919,  p.  5. 


102  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

rose  (luring  the  same  period  from  30  cents  to  95  cents,  the 
price  of  woolen  skirts  from  $2.00  to  $4.00,  of  house  dresses 
from  $1  to  $1.90. 

F"urnishings,  especially  household  linens,  draperies  and 
other  fabrics  often  advanced  in  price  100  per  cent  or  more. 
Large  increases  occurred  also  in  the  price  of  kitchen  utensils 
and  furniture.  The  advance  in  the  cost  of  tobacco  has  been 
placed  by  well  known  retailers  at  30  per  cent  to  40  per  cent.' 

Prices  of  coal  secured  by  the  Board  in  38  cities  and  by  the 
rnited  States  Fuel  Administration  in  21  States  indicated  that 
the  a\erage  price  of  anthracite  when  bought  in  ton  lots  for 
household  use  had  risen  about  45  per  cent  between  July,  1914, 
and  November,  1918.  The  average  increase  in  the  price  of 
bituminous  coal  for  household  use  was  about  60  per  cent. 
This  comparison  does  not  show  the  exact  situation,  since  the 
summer  price  of  coal  is  usually  slightly  lower  than  the  winter 
price;  the  true  advance  within  the  war  period  is  somewhat  less 
than  the  figures  indicate. 

According  to  the  data  gathered  by  the  Bureau  of  Labor 
Statistics,  the  average  and  relative  retail  prices  of  coal  in  ton 
lots  for  household  use  increased  January  15,  1913,  to  January 
15,  1919,  as  follows: 2  v 

AVERAGE  AND  RELATIVE  RETAIL  PRICES  OF  COAL  IN  TON  LOTS, 

FOR   HOUSEHOLD    USE 

January  15  of  Each  Year  1913  to  1919,  Inclusive 

[Average  price  for  year  1913=  100.] 

Pennsylvania  Anthracite,  White 

Ash  Bituminous 

Period  Stove  Chestnut 

Average   Relative  Average   Relative  Average   Relative 
Price        Price        Price        Price        Price        Price 
Average  for  year,  191 3.  ..   $7.73  100       $7.91  100       $5.41  100 

Jan.  15,  1913 7 

Jan.  15,  1914 7 

Jan.  15,  1915 7 

Jan.  15,  1916 7 

Jan.  15,  1917 9 

Jan.  15,  1918 9 

Jan.  15,  1919 II 


99  103  8 

80  loi  8 

83  loi  7 

93  103  8 

29  120  9 

88  128  10 

52  149  II 


15  103  5 

00  loi  5 

99  loi  5 

13  103  5 

40  119  6 

03  127  7 

61  147  7 


48  lOI 

97  no 

71  106 

69  105 

96  129 

68  142 

90  146 


1  Industrial  News  Survey,  Cost  of  Living  Supplement,  December  30.1918-Jan. 
uary  6,  1919,  p.  7. 

'  Monthly  Labor  Review,  March,  19 19,  p.  loi. 


THE    UNITED    STATES  1 93 

As  may  be  noted  in  the  table  the  first  big  advance  in  the  price 
of  all  kinds  of  coal  came  during  the  period  from  January  15, 
1917,  to  January  15,  1918.  From  January  15,  1918,  to  Janu- 
ary 15,  1919,  the  average  price  of  bituminous  coal  rose  but 
slightly,  from  $7.68  to  $7.90;  the  price  of  anthracite  during  the 
same  time  advanced  for  stove  size,  from  $9.88  to  $11.52,  and 
for  chestnut  from  $10.03  to  $11.61. 

From  data  furnished  by  chambers  of  commerce,  real  estate 
boards  and  brokers,  and  charitable  and  civic  organizations 
in  nearly  100  cities,  the  Industrial  Conference  Board  came  to 
the  conclusion  that  rent  rose  throughout  the  country  approxi- 
mately  20  per  cent.  There  were  marked  local  variations  in 
rent  changes. 


CHAPTER   II 
Wages  and  Cost  of  Living 

Wages 

There  are  in  the  United  States  no  comprehensive  wage 
statistics  for  the  entire  country  comparable  with  the  price 
statistics  of  the  Bureau  of  Labor.  The  meager  evidence 
which  is  available  shows  that  wage  advances  since  the  begin- 
ning of  the  war  have  been  very  uneven,  varying  according  to 
districts  and  occupations  and  fluctuating  from  6  per  cent  for 
daytime  newspaper  compositors  and  linotype  operators,  to 
105  per  cent  for  blacksmiths  (shipyards,  Delaware  River).' 
\\'hile  advances  from  40  to  75  per  cent  have  been  common  in 
such  types  of  labor  as  metal  workers  and  workers  in  textile 
mills  and  shoe  factories,  many  classes  of  laborers,  as,  for 
instance,  bakers,  bricklayers,  motormen  and  conductors  on 
street  railways,  have  received  increases  not  in  excess  of  10 
to  20  per  cent.  The  above  data  were  secured  by  Messrs.  Hugh 
S.  Hanna  and  W.  Sett  Lauck  from  records  and  reports  of 
federal  and  State  departments,  and  from  trade  and  labor 
publications.  In  an  interesting  study  on  "Wages  and  the 
War"  they  brought  out  the  facts  that  from  the  beginning  of 
the  war  to  the  close  of  1917,  "there  has  been  absolutely  no 
uniformity  in  the  degree  of  increase"  in  rates  of  labor  com- 
pensation, and  that  "the  great  advances  had  taken  place  in 
those  lines  of  industry  for  the  products  of  which  the  war  had 
created  a  special  demand. "^  Many  individual  workers,  of 
course,  profited  by  transferring  themselves  to  those  industries 
where  the  demand  for  labor  was  great  and  where  an  important 

^American  Economic  Association.  Report  of  the  Committee  on  War  Finance, 
pp.  105-107;  also  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  March,  1918, 
PP- 135-136. 

'  Hugh  S.  Hanna  and  W.  Sett  Lauck:  Wages  and  the  War:  A  Summary  of 
Recent  Wage  Movements,  Monthly  Labor  Review,  March,  1918. 

194 


THE    UNITED    STATES 


195 


advance  in  wages  took  place.  An  idea  as  to  what  were  the 
changes  in  relative  wages  and  earnings  in  December,  19 17, 
as  compared  with  19 14-15  may  be  gained  from  the  following 
table  :^ 


RELATIVE  WAGES  IN  LEADING   OCCUPATIONS,  DECEMBER,   1917, 

COMPARED   WITH    1914-15 


1914-15  =  100 


1917   Com- 
pared with 


Compositors  and  linotype  operators  (newspapers,  day) 

Electrotypers  (finishers) 

Hod  carriers  (plaster  tending) / 

Plumbers  and  gas  fitters  (building  trades) 

Structural-iron  workers  (building  trades) 

Steam  fitters  (building  trades) 

Motormen  and  conductors  (street  railways) 

Sheet-metal  workers  (building  trades) 

Mining  (anthracite) 

Inside  wiremen  (building  trades) 

Blacksmiths  (railroad  shops,  southeastern) 

Boiler  makers  (railroad  shops,  southeastern) ..'.... 

Longshoremen  (New  York) 

Machinists  (navy  yard,  Philadelphia) 

Machinists  (railroad  shops,  southeastern) 

Pick  mining,  bituminous  (Hocking  Valley  district) 

Ship  smiths  (navy  yard,  Philadelphia) 

Ship  fitters  (navy  yard,  Philadelphia) 

Pipe  fitters  (navy  yard,  Philadelphia) 

New  York  State,  average  (weekly  earnings) 

Silk  industry  (earnings) 

Riveters,  chippers,  and  calkers  (shipyard,  Washington,  Oregon).  .  . 

Blacksmiths  (shipyard,  San  Francisco) 

Machinists  (shipyard,  San  Francisco) 

Electricians  (shipyard,  San  Francisco) 

Shipwrights,  joiners,  boatmen,  millmen  (shipyard,  San  Francisco) . 

Machine  mining,  bituminous  (Hocking  Valley  district) 

Cotton  finishing  manufacturing  (earnings) 

Hosiery  and  underwear  manufacturing  (earnings) 

Common  labor  (iron  and  steel) '. 

Blast  furnaces  (iron  and  steel) 

Loftsmen  (shipyards,  Delaware  River) 

Electricians  (shipyards,  Delaware  River) 

Sheet-metal  workers  (shipyard,  San  Francisco) 

Cotton  manufacturing  (earnings) 

Open  hearths  (iron  and  steel) 

Sheet-metal  workers  (shipyards,  Delaware  River) 

Machinists  (shipyards,  Delaware  River) 

Woolen  manufacturing  (earnings) 

Riveters  (shipyards,  Delaware  River) 

Inside  labor  (most  occupations),  bituminous  (Hocking  Valley)  .  .  .  . 

Boot  and  shoe  industry  (earnings) 

Holders-on  (shipyards,  Delaware  River) 

Blacksmiths  (shipyards,  Delaware  River) 

^Hugh  S.  Hanna  and  W.  Sett  Lauck:  op.  ciL,  p.  136. 


19 


14-15 

106 

III 

112 

113 

113 

114 

115 
116 
118 
120 
123 
124 

125 
126 
129 
130 

134 
136 

137 
139 
140 
144 
144 
144 
144 

147 
149 

153 
157 
160 
161 
165 
165 
165 
165 
167 
167 
167 
170 

175 
176 
177 
197 
205 


196  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

According  to  the  information  in  the  possession  of  the  Bureau 
of  Labor  Statistics,  the  per  capita  earnings  in  the  iron  and  steel 
plants  of  the  country  were  88  per  cent  higher  in  October, 
1917,  than  in  January,  1915-  By  departments  the  increases 
in  the  average  earnings  per  hour,  in  September,  191 7,  as 
compared  with  May,  1915,  were  as  follows:  in  blast  furnaces, 
52  per  cent;  in  Bessemer  converters,  58  per  cent;  in  open 
hearth  furnaces,  38  per  cent;  in  blooming  mills,  35  per  cent; 
in  plate  mills,  50  per  cent;  and  in  sheet  mills,  95  per  cent.  An 
additional  ten  per  cent  increase  was  granted  by  most  com- 
panies in  October,  1917.^ 

Generally  speaking,  increases  in  wages  were  greater  in  those 
trades  and  localities  which  were  poorly  organized;  this  was 
due  largely  to  the  fact  that  they  were,  as  a  rule,  previously  on 
a  much  lower  level  of  compensation.  Much  smaller  advances 
on  the  average  are  shown  by  the  figures  for  union  wage  scales. 
Taking  the  rates  for  191 3  as  100,  these  figures  give  the  in- 
creases in  the  rates  of  wages  per  hour  as  follows  i^ 

1913 100 

1914 102 

1915 103 

1916 107 

1917 114 

For  agricultural  laborers  the  increase  in  average  wages  per 

month  was :  ^ 

Average  Rate  of  In- 

Section                                       Wages  per  Month  crease  Per 

1910              1917  Cent 

North  Atlantic $33-19  $48 .06                45 

South  Atlantic 19-75  30  ■ 

North  Central  east  of  Mississippi  River.  .  .  31   81  44. 

North  Central  west  of  Mississippi  River..  .  35  45  49- 

South  Central 21  .90  31  . 

Far  Western 46  .  48  63  . 

United  States 27  .  50  40 . 


80  56 

98  41 

46  40 

07  •      42 

59  37 

43  47 


It  is  difificult  to  arrive  at  any  definite   conclusion   as   to 
what  was  the  actual  increase  in  the  rates  of  wages  from  the 

1  N.  C.  Adams:  "Wages  and  Hours  of  Labor  in  the  Iron  and  Steel  Industry, 
September,  1917,  compared  with  May,  1915,"  Monthly  Review  of  the  U.  S.  Bureau 
of  Labor  Statistics,  March,  1918,  p.  29. 

2  Monthly  Labor  Review,  June,  1918,  p.  146. 

*  Monthly  Crop  Report,  March,  1918,  quoted  from  the  report  of  the  Commit- 
tee on  War  Finance,  American  Economic  Association,  p.  105. 


THE    UNITED    STATES  I97 

beginning  of  the  war  to  the  end  of  191 8;  it  does  not  seem 
that  wages  rose  as  rapidly  as  the  prices  of  commodities. 
However,  a  mere  study  of  the  rates  of  wages  is  not  sufficient 
for  the  determination  of  the  changes  in  the  standard  of  living 
and  in  the  general  welfare  of  the  laborers;  there  are  many 
other  factors  to  be  taken  into  account,  such  as  reduced  amount 
of  unemployment,  opportunity  for  going  into  higher  paid 
occupations,  overtime  work  with  extra  pay,  employment  of 
additional  members  of  the  family,  additional  expenses  of  the 
household  for  transportation,  board,  etc. 

The  purchasing  power  of  union  wages  measured  by  retail 
prices  of  food  is  given  by  the  Bureau  of  Labor  Statistics  as 
having  declined  as  follows:' 

The  wage  figures  are  for  May  of  each  year. 

Purchasing   Power   Measured  by   Retail 
Prices  of  Food 
Year  Of  Rates  of  Wages  Of  Rates  of  Wages 

1913 

1914 

1915 

1916 

1917 

1918 

The  table  shows  that  an  hour's  wages  in  1918  purchased 
but  79  per  cent  as  much  food  as  in  1913  and  a  week's  wages 
but  ']']  per  cent  as  much. 

Cost  of  LiVing 

The  increase  in  the  cost  of  food  in  the  United  States  in  the 
opinion  of  the  Food  Administration  has  been  greatly  over- 
estimated by  laying  too  much  emphasis  on  special  cases.  A 
computation  of  the  nation's  food  bill  prepared  by  the  Ad- 
ministration for  each  three  months,  beginning  with  the 
second  quarter  of  1917,  down  to  the  second  quarter  of  1918 
showed  the  following  results  i^ 

1  Monthly  Labor  Review,  March,  1919,  p.  119. 

^  Official  Statement  of  the  U.  S.  Food  Administration,  October  i,  1918,  p.  5. 


per  Hour 

per 

Week,  Full  Time 

100 

100 

100 

lOI 

99 

lOI 

94 
78 
79 

93 

77 
77 

ic)8 


PRICES    AND    PRICE    CONTROL   DURING    THE    WAR 


THE   NATION'S  FOOD   BILL 


Breadstuffs 

\'egetables 

Sugar 

Fruits 

Oils  and  nuts.  .  .  . 

Fish 

Meats 

Poultry  and  eggs . 
Dair)'  products .  . 


2d  Quarter, 
Total  Cost 
in  Dollars 
$314,906,915 

330,709,747 

200,674,663 

78,361,156 

52,302,765 

26,140,445 

764,882,651 

221,956,895 

573'.665,667 


1917 
Cost  per 
Capita 

$3-0383 

3 ■ 1905 

I  9363 

•7559 

.5046 

.2522 

7-3804 

2.1417 

5-5354 


3d  Quarter,  1917 

Total  Cost  Cost  per 

in  Dollars  Capita 

$393,732,314  $3-7844 

152,884,830  1.4694 

205,527,930  1.9754 

71,290,290  .6852 

58,304,496  .5604 

26,326,613  .2530 

777,233,981  7-4705 

226,038,723  2.1726 

584,068,678  5.6138 


Total $2,563,600,904   $24.7353     $2,495,407,855    $23 .9847 


Breadstuffs 

Vegetables 

Sugar 

Fruits 

Oils  and  nuts.  .  .  . 

Fish 

Meats 

Poultry  and  eggs . 
Dair\'  products .  . 


4th  Quarter,  1917 

Total  Cost  Cost  per 

in  Dollars  Capita 

$348,554,753  $3-3372 

136,899,969  1. 3 107 

210,439,897  2.0148 

70,506,614  .6750 

68,495,873  .6558 

33,133,947  -3172 

878,708,620  8.4131 

266,500,892  2.5516 

641,510,693  6.1421 


1st  Quarter 

Total  Cost 

in  Dollars 

$351-952,618 

143,179,060 

190,016,407 

75,057,007 

72,652,456 

40,631,802 

838,387,663 

304,216,881 

676,389,410 


,  1918 

Cost  per 
Capita 

$3-3567 
1-3655 
1 .8122 

•7158 
.6929 

•3875 
7.9961 
2  .9014 
6.4510 


Total $2,654,751,258  $25.4175     $2,692,483,304  $25.6791 


Breadstuffs 

Vegetables 

Sugar 

Fruits 

Oils  and  nuts.  .  .  , 

Fish 

Meats 

Poultry  and  eggs . 
Dairy  products.  . 


2d  Quarter,  1918 

Total  Cost  Cost  per 

in  Dollars  Capita 

$349,626,283  $3.3216 

123,903,476  1. 1768 

188,723,860  1.7930 

103,881,429  .9868 

81,964,541  .7786 

24,732,401  .2349 

938,789,266  8.9192 

262,577,561  2.4947 

619,553,054  5-8863 


Per  Cent  Increase  or 

Decrease  over  2d 

Quarter,  1917 

+  9-3 
-63.1 

-  7-4 
+30.5 
+54-3 

-  6.9 

+""20.8 

+16.5 
+  6.3 


Total $2,693,751,871  $25.5919 


+  3-5 


The  above  table  is  based  on  taking  the  total  food  consumed 
by  the  nation  divided  into  the  items  of  breadstuffs,  vegetables, 
meat,  etc.,  at  the  average  wholesale  price  for  the  quarter  and 
thus  arriving  at  what  the  nation  as  a  whole  actually  expended. 
The  increase  according  to  this  table  was  from  our  entry  into 
the  war  to  the  second  quarter  of  1918  from  $2,563,600,904 
to  $2,693,717,871,  or  3I  per  cent.  There  had  been  many  local 
variations,  prices  having  increased  to  a  larger  per  cent  where 
there  had  been  an  increase  in  population;  on  the  other  hand, 


THE    UNITED    STATES  1 99 

there  were  corresponding  sections  of  the  community  where 
actual  decreases  or  no  increases  had  taken  place.  According 
to  the  Food  Administration's  statement,  the  cost  of  rent, 
clothing,  transportation  and  other  items  of  living  advanced 
several  times  as  much  as  the  aggregate  increase  in  the  cost  of 
foodstuffs. 

It  is  surprising  that  the  Food  Administration  should  have 
used  wholesale  prices  for  the  purpose  of  presenting  the  nation's 
food  bill.  The  value  of  the  whole  compilation  as  an  indicator 
of  changes  in  the  cost  of  living  is  very  doubtful.  It  certainly 
does  not  reflect  actual  conditions.  Retail  prices  alone  can  be 
used  with  any  degree  of  accuracy  in  order  to  measure  changes 
in  the  cost  of  living  and  even  retail  prices  are  an  uncertain 
guide  unless  one  ascertains  the  relative  importance  of  each 
item  in  the  family  budget. 

The  National  Industrial  Conference  Board,  which  in  esti- 
mating changes  in  the  cost  of  food  relied  chiefly  upon  the 
figures  collected  monthly  by  the  United  States  Bureau  of 
Labor  Statistics,  arrived  at  the  conclusion  that  the  increase 
in  the  cost  of  food  entering  into  the  family  budget  was  between 
July,  1914,  and  the  middle  of  June,  1918,  62  per  cent,  as  com- 
pared with  an  increase  of  15  per  cent  for  rent,  77  per  cent  for 
clothing,  45  per  cent  for  fuel  and  light  and  50  per  cent  for 
sundries  (including  such  items  as  recreation,  furniture,  reading 
material,  tobacco,  etc.).  The  increases  in  cost  between  July, 
1914,  and  November,  1918,  of  the  items  entering  into  the 
family  budget  were:^ 

Food 83% 

Shelter 20 

Clothing 93 

Fuel  and  light 55 

Sundries 55 

The  increase  for  the  budget  as  a  whole  was  65.9  per  cent. 

In  combining  the  percentages  of  increase  for  the  respective 
items,  in  order  to  determine  the  average  increase  for  the  total 
budget,  food  was  taken  as  constituting  43  per  cent  of  the 

»  Industrial  News  Survey,  Cost  of  Living  Supplement,  August  19-26,  1918,  p.  i; 
December  30-January  6,  1919,  p.  i. 

14 


200  PRICES   AND    PRICE   CONTROL    DURING   THE    WAR 

family  expenditure,  rent  i8  per  cent,  clothing  13  per  cent, 
fuel  and  light  6  per  cent,  and  sundries  20  per  cent. 

The  budgets  considered  were  those  of  wage  earners  in  repre- 
sentative industrial  communities. 

A  brief  submitted  to  the  Director  General  of  Railroads  by 
the  Brotherhood  of  Locomotive  Firemen  and  Engineers  in 
connection  with  their  demands  for  increased  wages  contains 
some  valuable  cost  of  living  data,  which  show  the  cost  of 
specified  items  of  expenditure  in  the  working  men's  budget 
in  1900,  and  an  estimated  cost  of  similar  budgets  in  191 1, 
1 9 14  and  191 7.  The  budget  of  1900  is  based  upon  the  average 
expenditure  of  2,567  families,  as  ascertained  by  the  United 
States  Bureau  of  Labor  Statistics  and  published  in  its  report 
on  cost  of  living  (i8th  Annual  Report,  1903).  The  figures 
for  191 1,  1914  and  191 7  are  obtained  by  applying  to  the 
principal  items  of  the  1900  budget  the  percentages  of  increase 
in  those  years  as  compared  with  1900.  According  to  these 
estimates,  the  total  expenditure  per  family  increased  43  per 
cent  from  1914  to  1917.' 

ESTIMATED  WORKING  MEN'S  BUDGETS  IN  1911,  1914,  AND  1917,  AS 

COMPARED  WITH  1900 

Average 
Expendi- 
ture of  2,567  Estimated  Average  Expenditures 
Items  of  Expenditure              Working  of  a  Workihg  Man's  Family  in — 

Men's  Fami- 
lies in  1900  1911  1914  1917 

Jood $32700  $430.00       $477.00  $716.00 

J^^nt 100.00  133.00  132.00  159.00 

Mortgages 12.00  12.00  12.00  12.00 

Fuel  and  lighting 40.00  40.00  46.00  82.00 

Clothing 108.00  120.00  121.00  210.00 

T^axes 6 .  00  6 .  00  6 .  00  6 .  00 

Insurance 21,00  21.00  21.00  21.00 

Organizations 9.00  9.00  9.00  900 

Religious  purposes 8 .00  8 .00  8 .00  8 .00 

^"^"."^y , 300  3.00  3.00  3.00 

furniture  and  utensils 26.00  26.00  30.00  3900 

Books,  newspapers 8.00  8.00  8.00  9.00 

Amusements,  vacation 12.00  12.00  12.00  13.00 

Liquors 12.00  12.00  12.00  14.00 

lobacco. 11.00  11.00  11.00  12.00 

bickness,  death 21.00  21.00  21.00  21.00 

Other  purposes 45.00  51.00  50.00  67.00 

^^'■^^ 76900  923.00         979.00      1,401.00 

>  Monthly  Review  of  the  Bureau  of  Labor  Statistics,  April,  19 18,  p.  192. 


THE    UNITED    STATES  201 

An  Investigation  by  the  Bureau  of  Labor  of  the  changes  In 
retail  prices  In  connection  with  the  cost  of  Hving  In  shipbuild- 
ing centers  of  the  country  showed  that  the  percentages  of 
increase  In  these  centers  were  greater  than  the  findings  of 
the  Industrial  Board  or  of  the  Brotherhood  of  Locomotive 
Firemen  and  Engineers  Indicate  for  the  country  as  a  whole. 
The  per  cent  of  increase  in  December,  1918,  over  December, 
1914,  was,  in  a  family  budget  for  Philadelphia:  food,  83.35 
per  cent;  clothing,  111,16  per  cent;  housing,  8  per  cent;  fuel 
and  light,  47.94  per  cent;  furniture  and  furnishings,  107.69 
per  cent;  miscellaneous,  67.47  per  cent;  all  Items,  75.02.  The 
Increase  for  the  total  budget  in  New  York  was  78.79  per  cent; 
In  Baltimore,  86.37;  in  Seattle,  70.47;  In  Chicago,  74.14;  in 
San  Francisco  and  Oakland,  58.38.' 

A  number  of  other  local  Investigations  Into  the  Increase  in 
the  cost  of  living  were  made  from  time  to  time;  such  was, 
for  Instance,  an  Investigation  by  a  committee  of  employes  of 
the  Bankers  Trust  Company  of  New  York,  which  came  to 
the  conclusion  that  retail  prices  of  food  had  risen  60  per  cent 
between  1915  and  June  30,  1918.^  The  Bureau  of  Labor  of 
the  State  of  Washington  placed  the  Increase  In  the  cost  of 
groceries,  meat  and  fish  between  April,  19 14,  and  April,  1918, 
at  51  per  cent  In  Seattle,  47  per  cent  In  Tacoma  and  55  per 
cent  in  Spokane. 

As  to  any  definite  conclusions  regarding  increased  cost  of 
living  and  the  effect  of  this  increase  upon  the  status  of  the 
working  man  and  his  family,  one  may  subscribe  without  reser- 
vation to  the  statements  of  the  United  States  Commissioner 
of  Labor  Statistics,  that  "after  all  these  years  of  investigation 
and  statistical  toil  in  the  cost  of  living  field,  we  don't  know 
clearly  the  difference  between  the  higher  cost  of  living  and 
the  costs  of  higher  living,"  and  that  "we  can  not,  to  save  our 
lives,  tell  whether  the  Seattle  family  with  an  income  of 
$1,569.10  is  better  or  worse  off  than  the  New  York  family 

1  Monthly  Labor  Review,  May,  1919,  pp.  166-168. 

2  Industrial  News  Survey,  Cost  of  Living  Supplement,  August  19-26,  1918,  p.  4. 


202  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

with  $1,348.64  income.  We  do  know  tliat  most  workmen's 
families  spend  all  their  income.  Does  it  mean  that  American 
families  are  extravagant  or  does  it  mean  that  they  are  living 
at  or  below  the  margin  of  decency  and  health? "^ 

1  Royal  Meeker:  "The  Possibility  of  Compiling  a  Cost  of  Living    Index," 
Monthly  Labor  Review,  March,  1918,  p.  7. 


I 


CHAPTER   III 

Legislation  Authorizing  Price  Fixing  and  Price  Fixing 

Agencies 

The  National  Defense  Act,  approved  June  3,  191 6,  gave  the 
President  power  to  fix  prices  at  which  materials  could  be 
purchased  for  the  use  of  the  government.  There  was  some 
question  as  to  whether  his  power  extended  to  the  materials 
to  be  used  by  the  Allies,  but  the  consensus  of  legal  opinion 
was  that  the  power  applied  that  far.  To  the  War  Depart- 
ment was  delegated  the  authority  to  require  that  manu- 
facturers of  arms,  ammunitions,  supplies  and  equipment  for 
the  army  should  sell  their  products  at  a  reasonable  price, 
agreed  upon  by  the  Department. 

Similar  authority  was  given  by  the  law  of  March  4,  191 7, 
to  the  Navy  Department;  the  law  referred  to  ships  and  war 
materials  for  the  navy;  it  differed  from  the  act  dealing  with 
the  army's  requirements  in  that  it  provided  that  If  the  owner 
was  not  satisfied  with  the  compensation  fixed  by  the  Presi- 
dent he  could  accept  fifty  per  cent  and  have  the  actual  amount 
to  which  he  was  entitled  ascertained  by  the  courts.  ^ 

When  in  June,  191 7,  special  appropriations  were  made  for 
use  by  the  Shipping  Board  In  acquiring  merchant  vessels,  the 
President  was  given  powers  to  place  orders  for  the  construc- 
tion of  merchant  ships  at  prices  considered  by  him  as  reason- 
able. He  was  also  empowered  to  requisition  shipbuilding 
plants,  as  well  as  merchant  vessels  which  were  under  construc- 
tion in  American  yards,  charters  for  merchant  vessels,  etc. 
Those  who  felt  dissatisfied  with  the  compensation  allowed  by 
the  President  could  accept  seventy-five  per  cent  of  this 
compensation,  leaving  the  proper  amount  to  be  decided  by 
the  federal  courts. 

»  Chamber  of  Commerce  of  the  U.  S.  Referendum  No.  22  on  the  Report  of  the 
Special  Committee  on  Control  of  Prices  during  the  War,  p.  12. 

203 


204  PRICES  AND   PRICE   CONTROL  DURING  THE   WAR 

The  first  agreements  as  to  prices  between  governmental 
agencies  and  producers  can  be  traced  to  the  Council  of 
National  Defense  and  its  Advisory  Commission,  both  of 
which  were  created  in  a  section  of  the  Army  Appropriation 
Act,  approved  August  29,  191 6.  The  council  was  established 
to  study  the  industrial  and  transportation  systems  of  the 
Ignited  States  and  to  make  recommendations  as  to  the  best 
methods  which  might  be  utilized  in  case  of  some  possible 
future  war.  The  Advisory  Commission,  consisting  of  seven 
industrial  or  commercial  experts,  was  to  guide  the  council 
in  this  work.' 

The  commission  divided  itself  into  seven  committees,  two 
of  which,  the  one  on  supplies,  with  Julius  Rosen wald  as  chair- 
man, and  the  other  on  raw  materials,  minerals  and  metals, 
under  the  chairmanship  of  Bernard  M.  Baruch,  soon  assumed, 
in  addition  to  their  advisory  functions,  a  large  place  in  the 
actual  administration  of  the  affairs  of  the  contracting  depart- 
ments.^  Although  having  to  contend  with  a  certain  amount 
of  opposition  to  their  activities  from  the  military  officials  in 
charge  of  various  bureaus,  they  succeeded  in  inaugurating  the 
policy  of  personal  conferences  at  Washington  with  manu- 
facturers and  producers  of  essential  commodities.  As  a  result 
of  such  conferences,  informal  price  agreements  were  entered 
into,  the  effect  of  which  was  "not  only  to  save  the  govern- 
ment a  great  deal  of  money"  but  also  to  prevent  wholesale 
open  market  bidding  by  government  bureaus,  which  would 
have  caused  great  price  stimulation  and  which  would  have 
led  to  a  more  rapid  advance  in  prices  than  took  place  at  the 
time.  This  method  of  agreements  was  used  extensively  in 
the  subsequent  fixing  of  prices  by  the  War  Industries  Board, 
which  was  established  on  July  28,  191 7,  to  succeed  the  Gen- 
eral Munitions  Board.  The  latter  was  created  early  in  191 7 
as  the  first  attempt  at  a  coordinating  agency  to  counteract 
the  tendency  on  the  part  of  the  purchasing  bureaus  of  the  War 

^  C.  N.  Hitchcock:  "The  War  Industries  Board,"  Journal  of  Political  Economy, 
June,  I9i8,p.  548. 
'  /6t(/.,p.  551. 


THE    UNITED    STATES  205 

Department  to  bid  against  each  other  for  suppHes  and  ma- 
terials. The  board  had  also  the  task  of  planning  for  the 
production  of  munitions.  It  gave  particular  attention  to  the 
question  of  prices.  Notwithstanding  the  energetic  efforts  as 
well  as  the  tact  and  diplomacy  of  Frank  A.  Scott,  the  chair- 
man of  the  board,  the  lack  of  adequate  powers  and  the  loose 
organization  of  the  board  prevented  it  from  being  of  much 
service.  The  initiative  and  the  final  decisions  continued  to  rest 
with  the  heads  of  the  War  Department  bureaus,  who  merely 
consulted  the  board  "when  time  permitted."  The  Muni- 
tions Board,  despite  its  manifest  weaknesses,  served  in  a 
limited  measure  as  a  clearing  house  for  orders,  thus  preventing 
the  more  flagrant  cases  of  competition  between  different 
bureaus  and  giving  an  opportunity  for  common  counsel  on 
questions  of  price. 

The  War  Industries  Board,  like  the  Munitions  Board, 
which  it  succeeded,  derived  its  power  from  the  Council  of 
National  Defense.  One  of  the  functions  of  the  new  board,  in 
the  words  of  the  statement  which  created  it,  was  to  "consider 
price  factors."  As  the  council  itself  had  no  authority  to  fix 
prices,  it  could  not  delegate  any  such  authority  to  the  board. 

The  Price  Fixing  Committee  of  the  War  Industries  Board 
was  not  created  until  March  14,  1918.  Its  functions  were 
made  independent  of  those  of  the  board,  and  it  could  report 
directly  to  the  President. 

The  articles  dealt  with  by  the  Price  Fixing  Committee  in- 
cluded iron  and  steel,  copper,  lumber,  hides  and  leather,  wool, 
cotton  fabrics,  nickel,  aluminum,  quicksilver,  zinc,  nitric  and 
sulphuric  acid,  cement,  hollow  tiles,  brick,  sand  and  gravel. 
Thus,  its  scope  was  of  wide  range  with  regard  to  articles 
affected.  The  reason  why  all  these  commodities  were  brought 
under  control  may  be  found  in  the  war  needs  for  great  quan- 
tities of  each  of  these  articles.  Almost  the  entire  supply  of 
some  of  them  was  sought  either  by  the  United  States  Govern- 
ment or  by  the  Government  of  the  Allies. 

The  primary  function  of  the  Price  Fixing  Committee  was 
the  protection  of  the  interests  of  the  government.     Private 


206  PRICES   AND    PRICK    CONTROL   DURING    THE    WAR 

consumers  were  considered  only  in  so  far  as  the  principle  of 
one  price  for  all  was  adhered  to  in  the  committee's  agreements 
with  \arious  producers.  The  committee's  regulations  never 
extended  to  retail  dealers  and  only  in  a  small  degree  to 
wholesalers.' 

The  regulation  of  prices  after  the  United  States  entered 
the  war  was  carried  on  by  two  other  agencies:  the  Food 
Administration  and  the  Fuel  Administration.  They  were 
both  established  in  order  to  administer  the  provisions  of  the 
Lever  Food  Control  Act.  Unlike  the  Price  Fixing  Committee 
of  the  War  Industries  Board  both  the  Food  Administration 
and  the  Fuel  Administration  undertook  to  regulate  prices 
all  the  way  from  producer  to  consumer.  This  was  done  by 
means  of  fixing  basic  prices  as  well  as  by  establishing  maximum 
margins  for  .the  middlemen. 

The  Food  Control  Act 

Various  food  bills  had  been  submitted  to  both  houses  of 
Congress  since  April  2,  191 7.  Of  all  these  bills  two  have  been 
drafted  in  committee  and  after  having  been  introduced  twice 
in  different  forms,  passed  both  branches  of  legislature.  The 
first  of  these,  the  Food  Survey,  or  Production  Bill,  provided 
merely  for  an  investigation  of  food  conditions;  it  was  enacted 
without  much  opposition.  The  second  bill,  the  Lever  Food 
Control  Bill,  after  weeks  of  delay,  was  reported  on  June  13, 
191 7,  by  the  House  Committee  on  Agriculture  for  favorable 
action.  This  bill  gave  rise  to  very  bitter  debates  both  in  the 
House  and  in  the  Senate. 

The  opponents  of  the  bill  attacked  it  as  being  entirely  out 
of  place  in  a  "republic  of  freemen"  (Senator  Reed  of  Missouri).  2 
Senator  Gore  denounced  it  as  the  "sweepings"  of  all  the  Brit- 
ish and  Canadian  food  acts  and  orders  in  council,  and  declared 
that  if  passed  "it  would  cause  losses  to  producers  (in  1917) 
of  $250,000,000  in  wheat  and  $500,000,000  in  corn  and  result 

>  F.  W.  Taussig:  "Price  Fixing  as  Seen  by  a  Price  Fixer,"  Quarterly  Journal  of 
Economics,  February,  1919,  p.  208.  »     vi  ^  j 

'  The  Literary  Digest,  June  30,  1917,  p.  1976. 


THE    UNITED    STATES  207 

in  famine  next  year  through  reduced  production."  Senator 
Gore  sought  to  amend  rather  than  defeat  the  bill.  He,  like 
the  majority  of  the  bill's  opponents,  felt  that  the  situation 
required  some  government  action,  but  he  objected  to  an  act 
which  according  to  him  was  placing  too  much  power  in  the 
hands  of  one  man. 

One  of  the  most  vicious  press  attacks  on  the  measure 
appeared  in  the  New  York  Evening  Sun  which  held  the  pro- 
posed food  legislation  of  extreme  danger  to  the  country  be- 
cause it  was  bound  to  produce  the  very  evils  it  pretended  to 
avert,  namely,  "reduced  production,  chaos  in  marketing,  the 
withdrawal  of  capital  and  expert  skill  from  the  food  trades, 
panicky  buying,  high  prices  and  grievous  shortage  at  the 
points  of  consumption."  According  to  this  paper  the  bill  was 
bound  to  erect  an  all-pervasive  despotism  which  would  cover 
the  land,  the  factory,  the  mart  and  the  home. 

President  Wilson  in  recommending  the  adoption  of  the 
measure  stated  that  its  object  was  not  to  control  the  food  of 
the  country,  but  to  release  it  from  the  control  of  speculators 
and  other  persons  who  will  seek  to  make  inordinate  profits. 
Secretary  of  Agriculture  Houston  defined  as  the  purposes 
of  the  bill  "to  facilitate  and  clear  the  channels  of  distribu- 
tion, prevent  hoarding,  assure  fair  prices,  restrain  injurious 
speculation,  prohibit  evil  practices  on  exchanges,  protect  the 
public  against  corners  and  extortions  and  reduce  waste."' 

As  finally  passed  on  August  8,  191 7,  the  bill  embodied  most 
of  the  provisions  which  President  Wilson  requested.  The 
proposed  amendment  providing  for  a  three-man  food  admin- 
istration instead  of  one  administrator  was  defeated  as  were 
also  many  other  amendments  aiming  at  the  curtailment  of 
the  powers  of  the  food  controller. 

The  most  important  provisions  of  the  Food  Control  Act 
(H.  R.  4961)  as  they  applied  to  price  regulation  were: 

Section  i  provided  for  the  establishment  of  governmental 
control  over  the  supply,  distribution  and  movement  of  food, 
feeds,    fuel,    and    fertilizer   and    fertilizer   ingredients,    tools, 

^  The  Literary  Digest,  June  30,  191 7,  p.  1976. 


20S  PRICES   AND    PRICE    CONTROL   DURING    THE   WAR 

Utensils,  implements,  machinery  and  equipment  required  for 
the  production  of  foods,  feeds  and  fuels.  All  commodities 
mentioned  were  called  necessaries. 

Section  4  made  it  unlawful  for  any  person  wilfully  to  destroy 
any  necessaries  for  the  purpose  of  enhancing  the  price  or  re- 
stricting the  supply  thereof;  knowingly  to  commit  waste  or 
wilfully  to  permit  preventable  deterioration  of  any  necessaries; 
to  hoard,  to  monopolize  or  attempt  to  monopolize  necessaries; 
to  make  unjust,  or  unreasonable  charges  in  handling  or  deal- 
ing with  necessaries.  It  was  forbidden  to  combine,  conspire  or 
agree  with  any  other  person  to  restrict  the  supply,  distribution 
or  manufacture  of  necessaries  in  order  to  enhance  the  price. 

Section  5  gave  the  President  authority  to  license  the  im- 
portation, manufacture,  storage,  mining  or  distribution  of  any 
necessaries. .  No  one  but  licensees  were  permitted  to  engage 
in  these  activities,  exception  having  been  made  for  producers 
of  agricultural  products,  cooperative  societies  dealing  with 
agricultural  products  produced  by  their  members,  retailers 
whose  business  was  less  than  $100,000  per  annum  and  common 
carriers. 

Section  6  provided  that  necessaries  shall  not  be  hoarded 
beyond  the  reasonable  requirements  of  the  individual  or 
business. 

Section  10  authorized  the  President  to  purchase,  store  and 
provide  storage  facilities  for  and  to  sell  at  reasonable  prices 
wheat,  flour,  meal,  beans  and  potatoes. 

Section  12  provided  for  the  taking  over  and  operation  by 
the  government  of  any  factory,  packing  house,  pipe  line,  mine 
or  other  plant,  in  which  necessaries  were  manufactured  or 
mined,  if  such  action  was  deemed  necessary  to  secure  an  ade- 
quate supply  of  necessaries  for  the  army  and  navy  or  for  other 
public  use. 

Section  13  authorized  the  President  to  prescribe  regulations 
for  the  exchanges,  boards  of  trade  and  similar  organizations, 
dealing  in  necessaries,  should  he  find  such  regulations  neces- 
sary in  order  to  prevent  enhancement,  depression,  fluctuation 
of  prices  or  injurious  speculation  and  manipulation. 


THE    UNITED    STATES  209 

Section  14  provided  that  should  the  President  find  an 
emergency  existing  requiring  stimulation  of  the  production 
of  wheat,  he  could  guarantee  for  a  period  not  exceeding  18 
months  a  price  which  would  ensure  producers  a  reasonable 
profit;  No.  i  northern  spring  wheat  at  the  principal  interior 
markets  was  made  the  basis  upon  which  the  guaranty  for  the 
various  crops  was  to  be  calculated.  A  guaranteed  price  of  $2 
a  bushel  for  No.  i  northern  spring  wheat  was  established  for 
the  crop  of  191 8.  The  President  was  given  authority  to  in- 
crease the  import  duties  on  necessaries  should  he  find  this 
advisable  to  prevent  undue  importation  from  other  countries. 

Section  19  appropriated  $150,000,000  to  be  used  in  carrying 
out  the  business  operations  authorized  by  the  act. 

Section  24  provided  that  the  act  should  cease  to  operate  at 
the  termination  of  the  war  between  the  United  States  and 
Germany. 

Section  25  gave  the  President  most  comprehensive  powers  in 
regard  to  the  production  and  dealing  in  coal  and  coke.  He 
was  authorized  to  fix  the  price  of  coal  and  coke,  wherever  and 
whenever  sold;  he  could  requisition  and  take  over  the  plant, 
business  and  appurtenances  of  any  producer  or  dealer  who 
failed  to  conform  to  the  imposed  prices  and  regulations.  If 
he  thought  it  necessary  for  the  successful  prosecution  of  the 
war,  he  could  require  that  the  total  output  of  coal  should  be 
sold  exclusively  to  the  United  States,  to  be  resold  by  govern- 
ment agencies.  To  make  the  provisions  of  the  act  effective, 
the  Federal  Trade  Commission  was  authorized  to  make  a  full 
inquiry  into  the  management  and  costs  of  coal  and  coke,  in 
order  that  the  President  might  fix  the  maximum  price  for  the 
coal  and  coke  of  any  locality. 

The  Food  Administration 

While  the  Food  Administration  had  no  authority  to  fix 
prices  by  decree,  it  could  effectively  regulate  them  through  the 
system  of  licensing  dealers  in  foodstuffs,  through  the  control 
of  food  buying  for  the  army,  the  navy  and  the  Allies,  and 


210  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

through  the  power  of  preventing  hoarding,  speculation  and 
the  taking  of  unreasonable  profits. 

The  Food  Administration  had  from  the  very  outset  of  its 
activities  set  before  itself  as  one  of  its  main  tasks  the  attaining 
of  price  stability  in  the  essential  commodities.  Mr.  Hoover 
realized  the  necessity  of  stimulating  production  on  one  hand 
and  of  enforcing  conservation  on  the  other,  but  he  did  not 
believe  that  these  two  aims  could  best  be  served  by  "a  run- 
away market  and  by  exorbitant  prices."  His  first  public 
statement  after  his  appointment  as  Food  Administrator  thus 
defined  the  work  before  him:  "to  so  guide  the  trade  in  the 
fundamental  food  commodities  as  to  eliminate  vicious  specu- 
lation, extortion  and  wasteful  practices  and  to  stabilize  prices 
in  the  essential  staples."' 

Two  methods  were  open  for  the  purpose  of  carrying  into 
effect  the  provisions  of  the  Food  Control  Act:  (i)  recourse- 
to  criminal  proceedings,  (2)  administrative  action,  i.e.,  revo- 
cations of  license,  temporary  suspensions,  requisitions,  etc. 
The  general  attitude  of  the  Food  Administration  towards 
the  offender  has  been  that  penalties  were  less  important  than 
securing  compliance  with  the  Administration's  policies. 2, 

The  comparative  success  of  the  F'ood  Administration  in 
dealing  with  the  countless  and  complex  problems  which  were 
involved  in  the  stimulation  of  production,  prevention  of  hoard- 
ing and  of  speculation,  stabilization  of  prices,  equalization  of 
distribution  and  enforcement  of  conservation  may  be  attrib- 
uted to  the  great  skill  with  which  Mr.  Hoover  organized  his 
administration  and  to  his  understanding  of  the  psychology  of 
the  American  people  aroused  by  the  demands  of  the  war.^ 
Mr.  Hoover  has  shown  that  it  is  possible  to  have  a  bureau- 
cratic machine  without  its  concomitant  defects  of  unwieldi- 
ness  and  of  rigidity.  His  ofifice  had  none  of  the  traits  of  the 
conventional  Washington  office."  While  in  the  Food  Admin- 
istration there  were  as  many  subordinate  bureaus  as  perhaps 

'  C.  R.  Van  Hise:  Conservation  and  Regulation,  Part  ii,  p.  83. 

'Official  Statement  of  the  U.  S.  Food  Administration,  June  6,  1918,  p.  i. 

'  "Hoover,  His  Food  Administration,"  Review  of  Reviews,  p.  283. 

*C.  Merz:  "Strategy  in  Food,"  The  New  Republic,  January  26,  1918. 


THE    UNITED    STATES  211 

in  any  other  organization  in  Washington,  these  bureaus  were 
called  merely  "divisions";  they  appeared  and  disappeared  as 
the  occasion  demanded,  and  the  chiefs  of  these  divisions  passed 
from  one  responsible  position  to  another  wherever  they  could 
be  most  genuinely  useful.  Because  of  its  flexibility,  the  Food 
Administration  possessed  the  facility  of  rapidly  adapting 
itself  to  any  new  situation  and  of  being  able  to  handle  the 
work  expeditiously. 

Mr.  Hoover  sought  and  in  most  instances  obtained  the 
voluntary  cooperation  of  the  representatives  of  various  busi- 
ness interests  which  were  placed  under  his  control.  Most  of 
the  measures  passed  by  him  were  the  result  of  his  confer- 
ences with  those  who  were  to  be  affected  by  his  regulations, 
and  most  of  the  important  positions  in  the  Food  Adminis- 
tration were  entrusted  to  successful  organizers  and  adminis- 
trators of  private  business  enterprises.  Mr.  Hoover  was 
careful  to  make  it  clear  from  the  very  beginning  of  his  activi- 
ties that  he  did  not  wish  to  disturb  the  normal  channels  of 
business,  that  he  did  not  contemplate  to  supplant  any  eco- 
nomic factors  which  were  performing  a  useful  function. 
Realizing  the  futility  of  attempting  to  solve  in  one  central 
organization  the  manifold  and  pressing  problems  of  produc- 
tion and  distribution  of  foodstuffs  throughout  all  parts  of  the 
country,  he  enlisted  the  services  of  every  State  and  munici- 
pality in  the  union.  Each  State  was  placed  under  the  super- 
vision of  a  Federal  Food  Administrator  who  was  appointed 
by  the  President  upon  Mr.  Hoover's  recommendation.  Like 
Mr.  Hoover,  these  officials  were  volunteers,  receiving  no  pay 
for  their  services.  Administrators  were  also  appointed  for 
each  county  in  the  State;  the  county  administrators,  in  their 
turn,  organized  special  committees  to  look  after  the  food 
problems  in  every  city  and  township. 

Mr.  Hoover  constantly  objected  to  the  introduction  of  a 
system  of  compulsory  rationing.  His  objections  were  based 
on  the  following  grounds :  ( i )  fifty  per  cent  of  the  population 
in  the  United  States  are  either  producers  or  live  in  intimate 
contact  with  the  producers  and  therefore  can  not  be  restrained 


212  PRICES   AND    PRICE   CONTROL   DURING   THE   WAR 

in  their  consumption  by  any  system  of  rationing ;  (2)  the  habits 
of  consumption  of  the  American  population  with  regard  to 
any  given  commodity  vary  considerably  in  different  parts  of 
the  country;  thus  while  the  northern  worker  consumes  about 
eight  pounds  of  wheat  products  a  week,  the  southern  worker 
does  not  require  more  than  two  pounds  of  such  products. 
The  rationing  of  wheat  on  any  broad  national  lines  would 
increase  the  consumption  beyond  necessity  in  the  south,  while 
in  the  north  it  would  decrease  it  below  necessity.  (3)  Restric- 
tion of  consumption  of  the  very  poor  is  undesirable,  as  its 
consumption  is  not  above  what  is  strictly  necessary  for  the 
maintenance  of  health  and  strength  of  these  people;  (4)  com- 
pulsory rationing  would  mean  an  annual  cost  of  from  $10,000,- 
000  to  $15,000,000  to  the  government;  it  will  mean  the 
issuance  of.  tickets  and  coupons  to  every  householder,  the 
maintenance  of  a  vast  administrative  organization  which 
would  have  to  see  to  it  that  the  rates  are  enforced  and  obeyed. 

The  Licensing  System  and  the   Control  of   Margins 

The  first  proclamation  issued  by  the  President  under  the 
licensing  power  granted  to  him  by  the  Food  Control  Act 
applied  to  the  owners,  lessees  or  operators  of  wheat  or  rye 
elevators  and  to  all  persons,  firms,  corporations  and  associa- 
tions engaged  in  the  business  of  manufacturing  any  products 
derived  from  wheat  or  rye  (except  those  operating  mills  and 
manufacturing  plants  of  a  daily  capacity  of  one  hundred  bar- 
rels or  less  and  farmers  and  cooperative  associations  of 
farmers).  This  proclamation  was  issued  on  August  14,  191 7. 
to  become  effective  on  September  i,  191 7,  after  which  date 
no  one  was  allowed  to  engage  in  the  wheat  and  rye  warehous- 
ing or  manufacturing  business  without  having  previously 
secured  a  license.'  The  next  interests  brought  under  the 
licensing  control  were  the  importers,  manufacturers  and  re- 
finers of  sugar,  sugar  syrups  and  molasses;  they  were  required 
to  secure  a  license  on  or  before  October  i,  1917.^ 

1  U.  S.  Food  Administration,  Proclamation  and  Executive  Orders  by  the  President, 
p.  6. 

*  Ibid.,  p.  7. 


THE    UNITED    STATES  21^ 

A  more  far-reaching  measure  was  passed  on  October  8, 

191 7.     It  established  a  licensing  system  to  go  into  effect  on 
November  i,  which  gave  the  Food  Administration  power  to 

effectively  regulate  the  activities  of  all  persons  engaged  in 

the  importation,   manufacture,   storage  and   distribution  of 

certain   basic  foodstuffs.     The  commodities  enumerated  in 
the  new  proclamation  were: 

Wheat,  wheat  flour,  rye  or  rye  flour, 

Barley  or  barley  flour, 

Oats,  oatmeal  or  rolled  oats. 

Corn,  corn  grits,  corn  meal,  hominy,  corn  flour,  starch 

from  corn,  corn  oil,  corn  syrup  or  glucose, 
Rice,  rice  flour, 
Dried  beans. 
Pea  seed  or  dried  peas. 
Cottonseed,  cottonseed  oil,  cottonseed  cake  or  cottonseed 

meal. 
Peanut  oil  or  peanut  meal, 

Soya  bean  oil,  soya  bean  meal,  palm  oil  or  copra  oil, 
Oleomargarine,  lard,  lard  substitutes,  oleo  oil  or  cooking 

fats, 
Milk,  butter  or  cheese. 
Condensed,  evaporated  or  powdered  milk, 
Fresh,  canned  or  cured  beef,  pork  or  mutton, 
Poultry  or  eggs, 
Fresh  or  frozen  fish. 
Fresh  fruits  or  vegetables. 
Canned:  Peas,  dried  beans,  tomatoes,  corn,  salmon  or 

sardines. 
Dried :  Prunes,  apples,  peaches  or  raisins, 
Sugar,  syrups  or  molasses. 

Among  those  exempt  from  the  operation  of  the  ruling  were: 
retailers  whose  gross  sales  of  food  commodities  did  not  exceed 
$100,000  per  annum;  common  carriers;  farmers,  gardeners, 
cooperative  associations  of  farmers  or  gardeners  and  fisher- 


214       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

men.^  The  announced  object  of  this  Hcensing  system  was 
(i)  to  Hmit  the  prices  charged  by  every  licensee  to  a  reasonable 
amount  over  expenses,  and  to  forbid  the  acquisition  of  specu- 
lative profits  from  a  rising  market;  (2)  to  keep  all  food  com- 
modities moving  in  as  direct  line  and  with  as  little  delay  as 
practicable  to  the  consumer;  and  (3)  to  limit,  as  far  as  prac- 
ticable, contracts  for  future  delivery  and  dealings  in  future 
contracts.'  No  licensee  could  "import,  manufacture,  store, 
distribute,  sell  or  otherwise  handle  any  food  commodities  on 
an  unjust,  exorbitant,  unreasonable,  discriminatory  or  unfair 
commission,  profit  or  storage  charge." 

With  respect  to  enumerated  commodities,  the  regulations 
required  that  profits  should  be  no  greater  than  a  reasonable 
advance  over  the  actual  purchase  price  of  the  particular  goods 
sold,  without  regard  to  the  market  or  replacement  value. 
In  determining  the  amount  of  such  advance,  the  Food 
Administration  announced  that  the  licensee  could  average  the 
cost  of  goods  of  each  class.  For  example,  the  cost  of  all  canned 
corn  on  hand  was  to  be  averaged  and  a  reasonable  advance 
over  such  average  was  to  be  deemed  a  fair  sale  price  for  canned 
corn;  but  the  licensee  was  not  permitted  to  average  the  cost 
of  all  licensed  commodities  on  hand  and  add  an  advance  over 
such  average. 

"Purchase  price"  was  not  meant  to  be  used  in  the  literal 
sense  of  the  net  invoice  price  of  the  goods,  but  included  freight 
to  the  public  railway  terminal  in  the  dealer's  town.  In  a 
subsequent  definition  of  the  "purchase  price"  in  connection 
with  cold  storage  butter,  eggs  and  poultry,  the  purchase  price 
was  stated  to  include  original  buying  price,  transportation, 
storage  and  insurance  charges,  interest  on  the  money  in- 
vested at  the  current  rates  during  the  period  of  storage  and 
actual  cost  of  printing  when  butter  is  put  in  print  form  from 
tubs  or  cubes. ^ 

1  For  a  detailed  list  of  exemptions,  see  U.  S.  Food  Administration,  Proclama- 
tion and  Executive  Orders  by  the  President,  p.  8. 

2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  December,  191 7,  p. 
1 167;  also  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  97. 

*  Special  Rules  and  Regulations  Governing  Dealers  in  Cold  Storage  Eggs  and 
Frozen  Poultry,  effective  March  2,  1918;  Special  Regulations  Governing  Manu- 
facturers, Dealers,  Brokers  and  Commission  Merchants  in  Butter,  July  19,  1918. 


THE    UNITED    STATES  21 5 

When  no  specific  margin  has  been  laid  down  by  the  Food 
Administration,  the  standard  of  reasonableness  was  the 
profit  which  the  "dealer  customarily  enjoyed  on  the  same 
commodity  in  the  prewar  period  on  an  even  market  under 
freely  competitive  conditions."  Even  when  maximum  mar- 
gins were  specified,  it  was  expressly  stated  that  they  were 
to  be  regarded  as  "guides  only"  and  were  in  no  way  to  limit 
the  general  principle  that  the  advance  was  to  be  reasonable 
in  relation  to  the  customary  prewar  profit  of  the  individual;^ 
as  in  the  very  next  sentence  it  was  asserted  that  "high  mar- 
gins, even  if  customary  during  prewar  period,  are  not  justifi- 
able now,"  it  was  evidently  possible  to  consider  as  a  reason- 
able margin  the  customary  prewar  margin  only  in  the  case 
when  the  latter  was  reasonable  in  the  prewar  period.-  An 
attempt  was  made  to  meet  the  difficulty  by  asserting  that  the 
reasonable  margin  for  any  particular  dealer  depended  upon 
his  "cost  of  operation,"  the  cost  of  operation  referring  to  the 
costs  assignable  to  the  particular  class  of  commodity. 

Resales  within  the  trade  without  reasonable  justification, 
especially  those  tending  to  result  in  higher  market  prices, 
were  declared  unfair  practices. 

Special  rules  prescribed  that  foods  which  have  been  held  in 
cold  storage  for  more  than  30  days  were  to  be  marked  "cold 
storage  goods"  when  offered  for  sale;  other  rules  prohibited 
speculation  in  futures  on  canned  goods;  forbade  the  ship- 
ment of  potatoes  which  had  been  seriously  damaged ;  protected 
the  producer  who  shipped  his  products  to  markets  on  con- 
signment against  unfair  charges  by  commission  men,  brokers 
and  auctioneers,  and  covered  many  other  points. 

Although  the  small  retailers  of  food  were  exempt  from  the 
licensing  provisions  of  the  Food  Control  Act,  they  were  for- 
bidden under  the  terms  of  that  act  to  hoard,  monopolize, 
waste  or  destroy  food,  or  to  conspire  with  any  one  to  restrict 
production,  distribution  or  supply,  or  to  exact  excessive  prices 

1  Maximum  Margins  on  Sales  by  Wliolesalers  to  (i)  Retailers,  (2)  Importers 
of  Beans  and  Peas,  (3)  Merchandise  Brokers,  April  6,  1918. 

^  L.  C.  Gray:  "Price  Fixing  Policies  of  the  Food  Administration,"  American 
Economic  Review  Supplement,  March,  1919,  p.  257. 

15 


2l6  PRICES   AND    PRICE    CONTROL    DURING    THE    WAR 

on  any  commodity.  The  act  forbade  manufacturers  or  whole- 
salers to  sell  to  any  retailers  who  were  guilty  of  the  above 
mentioned  unfair  practices.  Retailers  doing  more  than 
$100,000  business  annually  were  required  to  secure  licenses. 
The  penalty  for  those  who  failed  to  obtain  a  license  was  five 
thousand  dollars  fine  or  two  years'  imprisonment.  The 
penalty  for  the  violation  of  the  rules  and  regulations  was  the 
revocation  of  the  license  and  criminal  prosecution. 

In  order  to  check  hoarding,  no  licensee  w^as  permitted  to 
keep  on  hand  or  under  control  food  supplies  for  more  than 
sixty  days  ahead.  Certain  exceptions  were  made  to  this 
ruling. 

The  Food  Administration  attempted  to  keep  track  of  the 
operations  of  all  licensees  by  means  of  regular  reports  which 
the  licensees  were  requested  to  submit  once  a  month.  It 
found  itself  swamped  with  such  reports,  which  it  was  unable 
to  examine  carefully.  After  May  i,  191 8,  the  policy  of  re- 
quiring detailed  monthly  reports  was  abandoned. 

While  the  Food  Administration  had  no  authority  to  fix 
prices,  it  inaugurated  in  November,  191 7,  the  policy  of 
establishing  "price  interpreting  boards"  in  the  principal 
centers  of  population  and  of  publishing,  from  day  to  day, 
fair  retail  prices  at  which  foodstuffs  were  to  be  sold. 

A  couple  of  weeks  after  the  inauguration  of  the  licensing 
system,  Mr.  Hoover  prohibited  combination  sales  on  all 
groceries.'  The  order  forbade  "the  sale  of  one  or  more  food 
commodities  upon  condition  that  the  purchaser  shall  buy  one 
or  more  other  food  commodities  from  the  seller."  The  single 
exception  to  the  ruling  was  the  permission  to  sell  sugar  in 
combination  with  corn  meal  at  the  rate  of  one  pound  of  sugar 
with  two  pounds  of  corn  meal;  the  exception  was  made  as  a 
wheat  conservation  measure.  The  reason  given  for  the  issue 
of  the  order  was  that  "combination  sales  frequently  result  in 
the  sale  of  more  foodstuffs  than  the  particular  purchaser  would 
ordinarily  buy  and  are  therefore  determined  to  be  a  wasteful 

^Interstate  Grocer,  November  24,  1917,  p.  i. 


THE    UNITED    STATES  217 

practice  within  the  meaning  of  section  4  of  the  Food  Control 
Actof  August  10,  1917." 

On  December  10,  1917,  the  control  by  means  of  licenses  was 
extended  to  include  all  those  engaged  in  the  manufacture  for 
sale  of  bread,  cake,  crackers,  biscuits,  pastry  and  other  bak- 
ery products.  This  was  followed  by  the  licensing  in  February, 
1918,  of  the  importation,  manufacture,  storage  and  distribu- 
tion of  feeds,  copra,  palm  kernels,  palm  kernel  oil,  peanuts 
and  green  coffee,  also  the  malting  of  barley  or  other  grains. 

In  May,  191 8,  the  President  extended  the  licensing  power 
of  the  Food  Administration  to  tuna  fish,  near  beer,  cottonseed 
and  a  number  of  other  commodities.' 

One  of  the  net  results  of  the  licensing  system  as  applied  to 
food  dealers  w^as  that  the  Food  Administration,  by  limiting 
traders'  margins  and  regulating  their  methods,  has  relieved 
them  of  the  responsibility  with  which  they  were  formerly 
charged,  by  both  producers  and  consumers,  for  the  high  cost 
of  living. 2 

Other  classes  of  business  gradually  brought  under  license 
were  the  arsenic  industry  (since  November  20,  191 7),  the 
ammonia  industry  (since  January  21,  191 8),  the  fertilizer  in- 
dustry (since  March  20,  191 8)  and  the  stockyards  (since  July 
25,  1 91 8).  The  carrying  into  effect  of  the  provisions  of  the 
various  acts  which  extended  licensing  to  the  above  industries 
was  entrusted  to  the  Secretary  of  Agriculture.^ 

At  the  beginning  of  July,  191 8,  the  Food  Administration 
recommended  that  the  publication  of  "fair  prices,"  heretofore 
confined  to  large  cities,  should  be  extended  to  every  county 
in  the  country.'*  Only  a  limited  number  of  staple  products, 
such  as  rye,  flour,  corn  meal,  sugar,  lard,  canned  corn,  canned 
tomatoes,  dried  fruits,  eggs,  butter,  potatoes,  cheese,  ham  and 
lard,  was  to  be  included  in  the  list.  It  was  suggested  that 
price  interpreting  boards  be  instituted,  consisting  of  representa- 

'  Commercial  and  Financial  Chronicle,  May  25,  1918,  p.  2715. 

*  F.  I.  Nourse:  "  Prico-Fixing.     Discussion.-'     American  Economic  Review  Sup- 
plement, March,  1919,  p.  273. 

'  U.  S.  Food  Administration,  Proclamation  and  Executive  Orders  by  the  President, 
pp.  9,  21,23,24. 

*  Official  Statement  of  the  U.  S.  Food  Administration,  July  6,  1918,  p.  4. 


2l8       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

ti\es  of  wholesale  grocers,  retailers  and  consumers.  The  board 
was  to  meet  at  least  once  a  week,  secure  from  the  wholesale 
representatives  the  prices  charged  by  them  to  the  retailer  and 
add  thereto  the  proper  margin  of  profit  for  the  latter. 

The  cooperation  of  newspapers  was  secured  for  a  regular 
publication  of  "fair  prices,"  and  a  checking  system  was  in- 
stituted which  enabled  the  county  administrators  to  know 
whether  the  dealers  were  not  charging  prices  in  excess  of 
those  published;  for  this  purpose  the  aid  of  the  retail  price 
reporters  located  in  each  county  was  invoked.  A  price  re- 
porting scheme  was  also  established  in  order  to  keep  the  Food 
Administration  in  Washington  informed  of  the  prices  charged 
for  the  staple  commodities  in  the  various  parts  of  the  country. 


CHAPTER   IV 
Wheat,  Flour  and  Bread 

Wheat 

The  production  of  wheat  in  the  United  States  fell  from  its 
high  level  of  891,017,000  bushels  in  1914  and  1,025,801,000 
bushels  in  1915  to  639,886,000  bushels  in  1916;  but,  because  of 
a  large  surplus  from  the  preceding  year,  the  wheat  situation 
in  1916  was  not  grave.  In  addition  to  the  crop,  178,- 
203,000  bushels  carried  over  from  the  previous  harvest^  pro- 
vided a  sufficient  supply  for  both  domestic  consumption  and 
for  export  trade;  the  latter  equaled  203,707,598  bushels,  as 
compared  with  122,998,754  bushels,  our  three  year  prewar 
average.  For  the  crop  of  191 7,  the  farmers  had  increased  the 
total  area  under  cultivation,  but  the  winter  killing  had  re- 
sulted in  much  abandonment  and  a  low  average  yield,  so  that 
the  total  production  in  191 7  was  not  far  in  excess  of  that  of 
1 91 6,  i.e.,  650,828,000  bushels.  The  carry  over  from  the  pre- 
ceding year  was  only  51,078,000  bushels,  the  lowest  in  many 
years. 

Obviously,  the  amount  of  wheat  was  insufficient  to  meet 
all  demands,  particularly  because  of  the  fact  that  ruthless 
German  submarine  campaign  so  reduced  world  tonnage  as  to 
make  unavailable  the  wheat  from  Argentina,  India  and  other 
distant  markets.  Upon  the  United  States  and  Canada  fell 
the  burden  of  supplying  the  bread  needs  of  the  Allied  and 
neutral  countries  of  Europe. 

What  were  the  Allied  needs  for  191 7  wheat  may  be  seen 

from  the  following  table  t^ 

Bushels  Bushels 

Three  year  average  prewar  imports 380,804,000 

Three  year  average  prewar  production 590,675,000 

Estimated  production,  1917 350,000,000 

Deficiency 240,675,000 

Total  requirements  to  maintain  normal  consumption.  621,479,000 

1  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation  {Wheat,  Flour  and 
Bread),  p.  7. 
"^  Ibid.,  p.  II. 

219 


220  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

The  average  price  of  No.  i  northern  spring  wheat  in  Minne- 
apoHs,  July  i,  1913-  to  June  30,  1914,  was  89  cents  a  bushel. 
The  price  rose  immediately  upon  the  declaration  of  war  and 
for  the  second  half  of  1914  wheat  was  selling  at  $1.09  a  bushel.  ^ 
It  continued  to  advance  steadily  through  the  winter  and  spring 
months  of  1915,  rising  to  $1.58  cents  in  May,  a  level  it  did  not 
reach  again  until  September,  1916,  when  wheat  was  quoted  in 
Minneapolis  at  $1.61  cents.  Due  to  an  exceptional  harvest, 
prices  were  comparatively  low  during  the  latter  part  of  1915 
and  the  first  half  of  1916;  they  fluctuated  between  98  cents  a 
bushel  in  September,  1915,  and  $1.29  cents  in  January,  1916. 
The  advance  which  commenced  in  July,  1916,  carried  the 
price  to  $2.98  cents  a  bushel  in  May,  191 7,  the  highest  price 
it  ever  reached  in  the  Minneapolis  market. 

The  ascent  of  prices  in  Chicago  during  the  period  from 
July,  1916,  to  July,  1917,  for  cash  No.  2  hard  winter  wheat 
was:  - 

159       January,  1917 $1 .  79i 

457       February,  1917 i  .69'6 

570       March,  1917 1.880 

739       April,  1917 2.377 

885       May,  1917 3.013 

735       June,  1917 2.675 


July,  1916 $1 

August,  1916 I 

September,  1916 i 

October,  1916 i 

November,  1916 i 

December,  1916 i 


The  highest  price  for  wheat  in  the  history  of  the  Chicago 
Board  of  Trade  was  reached  at  the  beginning  of  May,  when 
cash  wheat  was  selling  at  $3.25.  There  was  very  little  benefit 
from  these  high  prices  for  the  farmer,  who,  according  to  the 
reports  of  the  Department  of  Agriculture,  received  for  the 
191 7  wheat  an  average  of  $1.44  per  bushel,  the  bulk  of  the 
crop  having  been  marketed  by  the  producers  during  the  early 
part  of  the  harvest  year.  Manufacturers  and  distributors 
were  accused  by  many  of  having  forced  the  prices  up  by 
means  of  manipulating  the  market.  While  some  of  them  may 
have  made  large  profits  from  rising  prices,  it  is  hardly  fair  to 
put  upon  them  or  upon  the  speculators  on  the  exchanges  the 
blame  for  the  excessive  rise.     The  facts  are  that  American 

^  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918.  p.  62. 
^  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  7. 


THE    UNITED    STATES  221 

business  interests  on  the  wliole  had  been  endeavoring  to 
restrict  the  upward  trend  of  wheat  prices,  and,  as  far  as  specu- 
lative interests  were  concerned,  many  of  them  have  sold  short 
in  an  anticipation  that  the  price  will  go  down.  The  short 
sellers  overlooked  the  fact  that  the  situation  on  the  other  side 
of  the  Atlantic  was  abnormal.  The  Wheat  Export  Company, 
representing  the  Allies,  was  feverishly  buying  all  the  wheat  in 
sight,  buying  not  only  in  the  cash  market,  but  also  for  future 
delivery,  and  the  same  was  true  of  the  firms  representing 
neutral  governments.  To  this  uncontrolled  buying  from 
Europe,  buying  that  was  absorbing  all  the  wheat  thrown  on 
the  market,  irrespective  of  the  price  it  commanded,  was 
added  an  unusual  demand  for  flour  by  many  panic  stricken 
private  consumers  in  this  country.  In  order  to  be  provided 
against  any  contingencies  they  were  laying  in  vast  supplies. 
The  blame  for  the  latter  situation  was  placed  by  some  writers 
upon  the  United  States  Government  which  was  sending  out 
alarming  crop  reports  and  whose  officials  were  continuously 
warning  the  public  that  unless  it  curtailed  consumption  a 
famine  would  be  the  result.^ 

The  wheat  market  became  so  "oversold"  and  the  situation 
so  alarming  that  on  May  12,  191 7,  the  Chicago  Board  of 
Trade  suspended  all  tradings  in  May  wheat.  It  appointed 
at  the  same  time  a  price  fixing  committee;  the  latter  held  a 
series  of  conferences  in  Chicago,  in  which  the  United  States 
District  Attorney  and  representatives  of  the  British  Govern- 
ment took  part.  The  committee  prescribed  the  settlement 
of  all  May  contracts  at  $3.18  a  bushel.  Subsequently,  specu- 
lative trading  in  July  and  September  futures  was  also  pro- 
hibited. The  settling  price  for  July  and  September  futures 
was  fixed  at  $2.75  and  $2.45  respectively.  The  action  of  the 
Chicago  Board  of  Trade  suspending  speculation  was  followed 
by  similar  actions  at  St.  Louis,  Duluth,  Kansas  City,  Minne- 
apolis and  Toledo.'^ 

The  Food  Control  Act  guaranteed  a  minimum  price  of  $2.00 

^  W.  C.  Edgar:  "  Bureaucracy  and  Food  Control,"  American  Review  of  Reviews, 
1917,  p.  626. 
^  Commercial  and  Financial  Chronicle,  March  30,  1918,  p.  1281. 


222  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

a  bushel  for  the  wheat  crop  of  1917-18.  This  was  the  only- 
price  fixed  by  legislation  and  the  only  guaranteed  minimum 
price  which  was  in  existence  in  this  country  during  the  war. 
The  minimum  was  later  raised  under  the  discretionary  powers 
of  the  President  to  $2.20,  and  the  same  price  was  extended  to 
the  crop  of  1918-19. 

The  figure  of  $2.20  was  reached  by  no  careful  cost  inquiries 
or  statistical  computations  but  in  consequence  of  a  desire  to 
increase  the  production  of  wheat  and  also  to  placate  the 
farmers.^ 

Opinions  as  to  the  "fairness"  of  this  minimum  price  varied. 
Prof.  G.  E.  Call  of  the  Kansas  State  College  of  Agriculture 
estimated  that  it  meant  an  average  net  profit  for  the  farmer 
of  $1.41  per  bushel.  He  based  this  estimate  on  an  average 
value  of  $48  per  acre  for  the  wheat  land  of  the  country,  an 
average  crop  of  fourteen  bushels  to  the  acre,  and  an  average 
cost  of  78.7  cents  per  bushel  to  the  farmer.  On  the  other 
hand,  at  the  meeting  of  the  National  Non-Partizan  League 
held  at  St.  Paul  in  the  latter  part  of  September,  1917,  Mr. 
I.  M.  Hagan,  North  Dakota's  Commissioner  of  Agriculture, 
presented  figures  to  prove  that  it  cost  a  North  Dakota  farmer 
over  $21  an  acre  to  raise  wheat.  As  the  average  for  the  State 
was  only  seven  bushels  an  acre,  the  cost  for  raising  one  bushel 
of  wheat  was,  according  to  him,  $3.00.-  A  calculation  made 
by  a  Missouri  farmer  placed  the  average  cost  for  raising  a 
bushel  of  wheat  in  191 7,  with  a  yield  of  igl  bushels  per  acre, 
at  $1.8152.'  No  item  of  expense  seems  to  have  been  too  small 
or  too  remote  not  to  have  been  included  in  this  calculation  of 
costs. 

The  correctness  of  the  judgment  of  those  who  fixed  the 
price  at  $2.20  per  bushel  was  demonstrated  by  an  increased 
acreage  under  winter  wheat;  it  rose  to  42,000,000  acres,  an 
advance  of  about  2,000,000  acres  over  any  acreage  before 
known  in  American  history,  and  an  increase  of  7,000,000  acres 

'  F.  W.  Taussig,  "Price  Fixing  as  Seen  by  a  Price  Fixer,"  Quarterly  Journal  of 
Economics,  February,  1919,  p.  207. 

2  The  Literary  Digest,  Sept.  29,  1917,  p.  10. 

'  Food  Administration,  Doubling  the  Wheat  Dollar,  p.  6. 


THE    UNITED    STATES  223 

over  prewar  average.^  The  price  of  $2.20  was  a  compromise 
between  $1.84  demanded  by  labor  representatives  and  $2.50 
advocated  by  the  representatives  of  the  farmers. 

As  the  minimum  price  established  by  the  Food  Control  Act 
did  not  apply  to  the  191 7  harvest,  the  President  appointed  a 
committee,  selected  from  the  various  producing  sections  and 
consuming  interests  of  the  country,  to  determine  the  price  at 
which  grain  was  to  be  purchased  by  the  government  before 
the  coming  on  the  market  of  the  1918  wheat  crop.  This  com- 
mittee was  appointed  on  August  15;  among  its  members  were 
four  farmers,  one  capitalist,  three  college  professors,  one 
banker,  one  professor  of  economics  and  two  representatives 
of  labor.-  Mr.  H.  A.  Garfield  was  made  the  chairman  of  the 
committee. 

In  a  report  presented  on  August  30,  191 7,  the  committee 
recommended  that  the  price  of  No.  i  northern  spring  wheat, 
or  its  equivalent,  should  be  $2.20  per  bushel  at  Chicago.^  It 
based  its  conclusions  upon  the  "cost  estimates  for  the  crop  of 
191 7  furnished  by  the  United  States  Department  of  Agricul- 
ture, checked  by  the  results  of  independent  investigations  and 
the  evidence  submitted  to  the  committee  by  producers  and 
their  representatives."  The  time  which  intervened  between 
the  appointment  of  the  committee  and  the  presentation  of  the 
report  was  so  short  that  a  painstaking  investigation  by  the 
committee  of  the  cost  of  wheat  production  was  obviously  out 
of  the  question. 

Acting  upon  the  committee's  recommendation,  the  Presi- 
dent issued  an  order  establishing  the  price  for  191 7  wheat. 
According  to  this  order,  taking  $2.20  as  the  basic  price,  the 
prices  of  other  grades  in  Chicago  ranged  from  $2.10  for  No.  i 
humpback  to  $2.24  for  No.  i  dark  hard  winter.  No.  i  dark 
northern  spring  and  No.  i  amber  durum.  Equivalent  to  No. 
I  northern  spring,  or  basic,  were  No.  i  hard  winter.  No.  i 
red  winter.  No.  i  durum  and  No.  i  hard  white. 

1  Commercial  and  Financial  Chronicle,  March  2,  1918,  p.  876. 

2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  September,  1917,  p.  70. 
*  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  pp.  24-25. 


224  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

Differentials  between  the  different  primary  markets  of  the 
llnited  States  were  estabHshed  as  follows: 

Kansas  City  and  Omaha,  5  cents  less  than  basic;  Duluth 
and  Minneapolis,  3  cents  less;  St.  Louis,  2  cents  less;  New 
Orleans  and  Galveston,  basic;  Buffalo,  5  cents  more;  Balti- 
more and  Philadelphia,  9  cents  more;  and  New  York,  10  cents 
more  than  the  basic. ^  The  prices  for  Nos.  2,  3  and  4  of  each 
grade  were  recommended  to  be,  respectively,  3,  6  and  10  cents 
less  than  basic. 

Many  unsuccessful  attempts  were  made  to  increase  the 
minimum  price  for  the  191 8  crop  to  $2.50  (Senator  Gore's  bill) 
and  even  to  $2.75  (Senator  McCumber's  bill).  On  February 
20,  1918,  the  Food  Administration  announced  that  it  would 
use  all  its  influence  to  prevent  the  enactment  of  any  price 
increasing  bill  because  the  passage  of  such  a  bill  would  upset 
its  entire  wheat  and  bread  program. ^ 

In  an  effort  to  force  an  increase,  an  amendment  raising  the 
price  of  wheat  to  $2.40  was  included  in  the  annual  agricultural 
appropriation  bill  for  the  fiscal  year  191 8-19.  President  Wil- 
son vetoed  this  bill.  Those  who  opposed  the  higher  minimum 
argued^  that  any  such  change  would  disorganize  the  plans 
made  by  the  administration,  would  be  unjust  to  those  farmers, 
millers,  etc.,  who  had  made  contracts  on  the  established  basis, 
and  would  raise  unduly  the  price  of  flour  to  the  consumers 
(from  $10.50  to  $12.50  a  barrel).  It  was  also  pointed  out 
that  the  Allies  were  buying  Argentinian  wheat  at  $1.40  a 
bushel. 

The  Food  Administration's  measures  affecting  the  wheat 
trade  were  very  largely  the  result  of  recommendations  by  a 
Committee  of  Grain  Exchanges  in  Aid  and  National  Defense. 
This  committee  was  organized  in  April,  191 7,  after  consulta- 
tions between  the  Council  of  Grain  Exchanges  and  the  Secre- 
tary of  Agriculture.  The  committee  at  the  request  of  Mr. 
Hoover,  submitted  a  plan  of  action  which  in  its  opinion  would 
be  acceptable  both   to  the  government  and   to  the   trade. 

1  Monlhly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  November,  19 17,  p.  80. 
*  Commercial  and  Financial  Chronicle,  February  23,  1918,  p.  771. 
»  The  New  York  Evening  Post,  December  31,  19 18. 


THE    UNITED    STATES  225 

The  committee  expressed  itself  in  favor  of  fixing  a  wheat  price 
and  of  maintaining  it  for  the  entire  crop  year  without  change; 
it  also  went  on  record  as  desirous  of  governmental  control  of 
the  distribution  of  the  available  wheat  supply;  the  discontinu- 
ance of  trading  in  futures  in  wheat  on  the  grain  exchanges; 
and  the  limitation  of  the  practice  of  buying  flour  far  in  advance 
of  actual  needs.'- 

The  other  body  which  helped  to  shape  the  control  of  wheat 
trade  was  the  United  States  Millers'  Committee  appointed  by 
Mr.  Hoover  on  June  22.  It  consisted  of  nine  leading  mem- 
bers of  the  flour  milling  industry,  representing  the  several  sec- 
tions of  the  country.  The  committee  reported  on  June  28  a 
plan  which  proposed  that  each  mill  should  be  entitled  to  sell 
its  products  on  a  cost  plus  profit  basis,  provided  the  cost  of 
manufacturing  and  marketing  did  not  exceed  seventy-five 
cents  per  barrel,  while  the  amount  of  profit  was  to  be  limited 
to  twenty- five  cents  per  barrel.  The  mills  agreed  to  abide  by 
the  government's  allocation  of  business  among  them  on  the 
basis  of  their  average  output  for  the  three  preceding  years. 
They  also  agreed  that  their  sales  of  flour  should  be  limited  to 
a  period  of  thirty  days  in  advance.  These  proposals  were 
ultimately  adopted  as  the  basis  of  milling  regulations.'^ 

In  order  to  eliminate  speculation  in  wheat  and  flour,  the 
Food  Administration  adopted  the  following  measures: 

First.  It  limited  the  right  to  storage  of  wheat  and  flour 
without  the  approval  of  the  Food  Administration  to  thirty 
days. 

Second.  The  flour  mills  of  the  country  were  prohibited 
from  contracting  for  sale  of  flour  more  than  thirty  days  in 
advance. 

Third.  All  the  grain  exchanges  of  the  country  were  re- 
quested to  suspend  during  the  period  of  war  all  trade  in  futures 
of  every  kind.^ 

One  of  the  efTects  of  the  Food  Administration's  rulings  was 

'  W.  Eldred:  "Wheat  and  Flour  Trade,"  Quarterly  Journal  of  Economics,  No- 
vember, 1918,  p.  6. 
^  Ibid.,  p.  9. 
'  U-  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  i6. 


226  TRICES   AND    PRICE    CONTROL    DURING    THE   WAR 

the  elimination  of  the  ordinary  means  by  which  the  greater 
part  of  the  country's  grain  trade  is  financed,  i.e.,  through  the 
purchase  and  sale  of  futures.  It  became  necessary  to  use 
government  funds  for  the  purpose  of  carrying  the  movement 
oi  wheat  and  to  provide  some  machinery  which  would  assume 
the  functions  of  the  normal  agencies  of  distribution.  The 
problem  was  solved  by  the  establishment  of  the  United  States 
Food  Administration  Grain  Corporation. 

There  were  precedents  in  the  government  doing  business 
through  business  corporations;  such  were  for  instance  the 
Emergency  Fleet  Corporation  and  the  Panama  Railways. 
Mr.  Hoover  saw  the  advantages  of  economy,  flexibility  and 
expedition  which  lie  in  such  a  system  as  compared  with  rely- 
ing upon  the  ordinary  machinery  of  the  Treasury;  so  ill 
adapted  to  trading  operations.  Like  all  the  other  organiza- 
tions created  by  Mr.  Hoover,  the  Grain  Corporation  was  not 
bureaucratic  either  in  its  personnel  or  in  its  character. 

Some  of  the  country's  best  experts  in  the  wheat  trade  were 
made  responsible  heads  of  the  corporation.  It  opened  its 
offices  on  September  4,  191 7,  and  immediately  proceeded  to 
regulate  the  conditions  in  the  wheat  markets.  Provided  with 
$50,000,000  of  the  government  funds,  it  became  the  dominant 
purchasing  factor  all  over  the  United  States.  The  country 
was  divided  into  fourteen  zones,  each  containing  an  important 
terminal  market.  Government  representatives  who  were  large 
scale  dealers  themselves  before  the  war  were  appointed  as 
buyers.  Grain  corporation  agents  at  various  milling  centers 
acted  as  distributors  of  wheat;  they  apportioned  the  wheat  as 
it  arrived  at  each  center  among  the  various  mills  of  the  place 
in  accordance  to  the  needs  of  each  mill. 

The  agreement  between  the  Grain  Corporation  and  the 
flour  millers  provided  that  the  latter  should  in  purchasing 
wheat  observe  and  be  governed  by  all  rules  and  regulations 
enacted  by  the  corporation.  The  Grain  Corporation  guaran- 
teed millers  against  losses  by  a  decline  in  value  on  all  accumu- 
lated surplus  of  unsold  wheat  bought  in  accordance  with  the 
Grain  Corporation's  regulations;  it  further  agreed  to  endeavor 


THE    UNITED    STATES  32/ 

to  maintain  in  available  positions,  an  adequate  supply  of  suit- 
able wheat  to  meet  the  milling  demands  of  the  miller  at  the 
general  price  level  of  wheat. 

On  June  21,  1918,  the  capital  stock  of  the  Food  Administra- 
tion Grain  Corporation  was  increased  to  $150,000,000.  The 
purpose  of  the  executive  order  which  authorized  this  increase 
was  twofold:  first,  to  enable  the  Food  Administration  to  make 
the  necessary  readjustments  in  wheat  prices  at  guaranty  ter- 
minals to  cover  the  increase  in  railway  rates;  and  second,  in 
view  of  the  large  harvest,  to  provide  the  Grain  Corporation 
with  the  increased  capital  necessary  to  carry  out  the  guaranty 
to  the  producer.  The  intention  was  to  readjust  prices  at 
primary  markets  in  such  a  way  as  to  place  the  farmer  in  as 
nearly  as  possible  the  same  position  as  the  one  which  he 
enjoyed  prior  to  the  increase  in  freight  rates. ^ 

The  "fair  price"  for  "basic"  wheats  in  Chicago  was  fixed 
at  $2.26;  prices  in  the  other  markets  ranged  from  $2.18  in 
Kansas  City  and  Omaha  to  $2.39^  in  New  York.  As  in  the 
previous  regulations,  certain  classes  and  varieties  of  wheat 
were  dealt  in  either  at  premiums  over  or  at  discounts  under 
the  prices  for  "basic"  wheats.  The  "premium"  was  2  cents 
for  No.  I  dark  hard  winter.  No.  i  dark  northern  spring  and 
No.  I  amber  durum;  the  "discounts"  varied  from  2  cents  for 
No.  I  yellow  hard  winter  and  No.  i  soft  white  to  7  cents  for 
No.  I  red  durum  and  No.  i  red  walla.  Discounts  for  grades 
other  than  No.  i  were  fixed  at  3  cents  under  No.  i  for  No.  2 
wheat  and  7  cents  under  No.  i  for  No.  3  wheat.  Grades 
below  No.  3  were  to  be  dealt  in  on  sample  on  merit. '^ 

Two  courses  were  open  to  the  farmers:  either  to  ship  direct 
to  the  Grain  Corporation  at  any  of  the  principal  primary 
markets,  or  to  ship  to  a  commission  merchant  and  through 
him  offer  the  wheat  for  sale  in  the  open  market,  thus  securing 
the  benefit  of  competitive  buying.  The  competitive  market 
was  held  in  check  as  the  millers  agreed  not  to  pay  for  the  wheat 
a  price  in  excess  of  that  adopted  by  the  Food  Administration 

1  Official  Statement  of  the  U.  S.  Food  Administration,  July  6,  1918,  p.  i. 

2  U.  S.  Dept.  of  Labor  Monthly  Labor  Review,  August,  1918,  p.  358. 


228  TRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

for  government  purchases.  This  fixed  the  maximum  price 
offered  by  domestic  purchasers.  Export  buying  for  the 
AlHes  was  concentrated  in  the  hands  of  the  Wheat  Export 
Company,  which,  as  well  as  the  buyers  representing  neutral 
nations,  acted  in  concert  with  the  Grain  Corporation.  Com- 
petition among  foreign  buyers  was  in  this  way  also  eliminated 
and  a  stabilized  price  for  foreign  purchases  assured. 

Because  the  price  of  wheat  was  reduced  below  what  it  would 
have  been  under  competitive  conditions,  it  became  relatively 
lower  than  the  price  of  other  foods,  with  the  result  that  al- 
though a  portion  of  the  population  refrained  from  eating 
wheat  in  response  to  the  Food  Administration's  appeals,  the 
total  consumption  in  the  first  part  of  191 7-1 8  was  somewhat 
larger  than  in  1916-17.  An  unduly  large  proportion  of  the 
year's  crop  was  consumed  by  February,  191 8.  The  year's 
exports  were  much  lower  than  in  the  previous  year.  It  be- 
came necessary  to  resort  to  the  use  of  wheat  substitutes.^ 

The  Food  Administration  first  compelled  the  purchase  of 
other  cereals  with  wheat  flour  on  January  28,  1918,  when  the 
"50-50"  rule  went  into  effect.  On  February  3,  the  first 
compulsory  baking  regulations  were  irnposed  upon  the  trade. 
On  that  date  bakers  were  required  to  mix  5  per  cent  of  other 
cereals  with  their  wheat  flour;  by  February  24,  the  proportion 
of  substitutes  was  increased  to  20  per  cent.  In  April  the 
wheat  shortage  had  become  so  acute  that  the  bakers  were 
compelled  to  increase  the  use  of  substitutes  to  25  per  cent. 
These  baking  regulations,  as  well  as  the  50-50  rule,  remained 
in  force  until  August  28,  when  the  bakers  were  once  more 
allowed  to  make  a  bread  containing  only  20  per  cent  of  wheat 
substitutes  and  the  50-50  rule  was  changed  to  80-20.  On 
November  14  the  Food  Administration  suspended  all  regula- 
tions requiring  the  use  of  wheat  substitutes. - 

The  guaranteed  price  of  wheat  for  the  191 9  crop  has  not 
been  affected  by  the  end  of  the  war.  This  guarantee  expires 
June  I,  1920. 

'  G.  F.  Warren:  "Some  Purposes  and  Results  of  Price  Fixing,"  American  Eco- 
nomic Review  Supplement,  March,  1919,  p.  240. 

=*  Official  Statement  of  the  U.  S.  Food  Administration,  December  i,  1918,  p.  7. 


THE    UNITED    STATES  229 

Flour 

Control  of  the  Mills 
Flour  rose  in  price  upon  the  declaration  of  the  war  in  Europe 
from  $449  a  barrel  in  Minneapolis,  in  June,  1914,  to  $5.51 
in  August  of  the  same  year;^  the  average  prices  of  flour  for 
1914,  1915  and  1916  respectively  were  $5.09,  $6.66  and  $7.26 
as  compared  with  $4.58  for  1913.  The  pronounced  advance 
did  not  begin  until  July,  1916;  the  quotation  rose  from  $6.10 
during  that  month  to  $9.82  in  November,  1917;  a  slight  de- 
cline occurred  in  December  when  the  price  dropped  to  $8.68. 
The  average  for  the  first  quarter  of  191 7  was  $9.30.  Upon 
the  declaration  of  the  war  by  the  United  States,  flour  went 
up  to  $11.62  in  April  and  to  $14.88  in  May,  191 7,  the  highest 
point  it  ever  reached.  When  the  government  began  its  price 
regulating  activity  in  August,  191 7,  flour  was  selling  for 
$13.07  a  barrel.  According  to  the  findings  of  the  Federal 
Trade  Commission,  the  net  profits  made  by  millers  increased 
from  1 1  cents  per  barrel  in  the  crop  year,  1912-13,  to  52  cents 
per  barrel  in  the  crop  year,  19 16-17.-  The  price  of  flour  went 
down   to   $11.26  in  September,  and  to  $10.13  in  December, 

191 7,  around  which  figure  flour  was  selling  during  the  first 
half  of  1918,  the  price  fluctuating  between  $9.52  in  May  and 
$10.30  in  February. 

In  order  to  carry  out  the  provisions  of  the  Food  Adminis- 
tration's regulations  dealing  with  flour  mills  the  country  was 
divided  into  nine  milling  divisions,  and  a  committee  of  repre- 
sentative millers  was  appointed  by  the  Food  Administration 
in  each  division.^  The  chairmen  of  the  different  divisions 
constituted  a  central  committee,  whose  headquarters  were  in 
New  York.  The  entire  structure  was  known  as  the  United 
States  Food  Administration  Milling  Division. 

The  millers  undertook  to  regulate  their  trade  by  voluntary 
agreement,  which  became  effective  on  September  10,   191 7. 

>  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November. 

1918,  p.  44. 

2  Report  of  the  Federal  Trade  Commission  on  Flour  Milling  and  Jobbing,  April 
4,  1918,  p.  7.  ,  ,^  . 

'  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  37. 


230  PRICES    AND    PRICE    CONTROL    DURING   THE    WAR 

The  principal  points  of  the  agreement  were:  (i)  they  could 
not  purchase  wheat  at  a  higher  price  than  the  fair  price; 
(2)  the  Grain  Corporation  was  to  endeavor  to  supply  the  mill- 
ers with  wheat  on  the  basis  of  an  average  of  their  assessed 
capacity;  (3)  the  millers  were  to  operate  their  mills  at  a  net 
profit  not  exceeding  25  cents  a  barrel  on  flour  and  50  cents  a 
ton  on  feed  (the  latter  was  equivalent  to  about  1.7  cents  per 
barrel  of  flour  additional) ;  this  maximum  profit  was  based 
upon  the  needs  of  the  small  mills. ^  The  Federal  Trade  Com- 
mission objected  to  the  regulation  of  flour  millers'  profits  at  a 
fixed  margin  above  cost  of  production,  because  such  a  method 
of  remuneration  possesses  an  inherent  weakness  of  not  encour- 
aging production  and  of  aft'ording  to  those  unpatriotically 
inclined  a  temptation  to  dishonesty  in  cost  accounting. ^  Not 
a  few  millers  took  advantage  of  the  situation  and  loaded  their 
cost  reports  with  such  items  as  new  construction  and  equip- 
ment, bad  debts  of  ancient  standing,  excessive  depreciation 
charges,  losses  on  miscellaneous  outside  investments,  etc.; 
all  these  were  added  to  current  costs  of  production  and  so 
charged  to  the  consumer;^  (4)  the  millers  could  not  contract 
for  flour  more  than  30  days  in  advance;  (5)  they  could  not 
store  wheat  without  permission  of  the  Food  Administration 
for  more  than  30  days'  supply;  (6)  they  were  to  apportion 
over  the  entire  milling  trade  the  export  purchases  of  flour.* 

Inasmuch  as  a  minority  of  millers  failed  to  enter  this  agree- 
ment it  became  necessary,  both  in  protection  to  the  voluntary 
adherents,  to  the  administration  and  to  the  public,  to  legally 
license  the  entire  trade  of  a  capacity  in  excess  of  75  barrels 
per  day.  On  November  27,  191 7,  agreements  received 
showed  that  the  past  three  year  average  production  of  mills 
operating  under  voluntary  regulations  was  101,131,481  bar- 
rels out  of  a  comparative  production  of  all  mills  in  the  United 
States  of  118,000,000  barrels.     Some  of  the  results  accom- 

1  Report  of  the  Federal  Trade  Commission  on  Flour  Milling  and  Jobbing,  April 
4,  1918,  p.  19. 

-  Ibid.,  p.  10. 

3  VV.  Eldred:  "The  Wheat  and  Flour  Trade  under  Food  Administration  Con- 
trol," Quarterly  Journal  of  Economics,  November,  1918,  p.  47. 

^  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  39. 


THE    UNITED    STATES  23I 

plished  through  the  cooperation  and  regulation  of  these  mills 
were  according  to  the  Food  Administration: 

Basic  wheat  prices'  had  been  maintained  and  observed 
throughout  the  industry,  and,  in  conjunction  with  the  Grain 
Corporation,  the  Milling  Division  effected  an  equitable  dis- 
tribution to  mills  of  all  available  wheat  supplies. 

A  price  reduction  in  the  mill  sale  of  flour  took  place  which 
reflected  the  proper  relation  between  the  cost  of  raw  material 
and  the  finished  product.  It  takes  approximately  4I  bushels 
of  wheat  to  make  a  barrel  of  flour.  In  reviewing  the  course 
of  prices  of  wheat  and  flour  on  this  basis,  Mr.  Hoover  formu- 
lated the  following  table :^ 


S13  li;  ■C'i-^  gi§  S^-  te^^ 

vSi  OJC  n.'^5  ri-^"  ;=?-mO  .-*j: 


mE  .2  "=^a  ig^^         £^''  S^"i 


Harvest  Year  ^'^•S  -S!  ^  f^,j<  w  u  m  Q  <uj2  Q  K-^ 

s°J      ^^?    !ss=s     ^-^ss    |-3l.     sisla, 

^oS  M-l       ^tSoR        fc-5S^      fg&g        |-i&g 

1915-6 $0.98       $4.41       $6.09       ^1.68       $2.71       $0.81 

1916-7 1.44         6.48         9.88         3.40         9.26  .50 

1917-8'' 2.01         905       10.15         iio         160  .90 

*  Department  of  Agriculture  figures. 
''  Since  control  mid-September. 

The  Food  Administration  also  prepared  a  chart  (page  232), 
showing  graphically  the  results  of  the  activities  of  the  Milling 
Division  from  its  establishment  to  November  4,  191 7. 

Reduction  of  cost  to  the  consumer  was  secured  by  the 
standardization  of  flour  packages  and  the  elimination  of 
wasteful  and  costly  containers. 

The  Milling  Division  had  furnished  the  material  and  the 
machinery  for  the  purchase  of  all  of  the  flour  requirements  of 
the  European  Allies,  with  the  least  disturbance  of  domestic 
conditions  and  at  a  price  in  accordance  with  a  minimum 
of  expense;  it  also  materially  assisted  the  army  and  navy 
in  securing  and  distributing  adequate  supplies  of  flour, 
promptly  and  advantageously. 

A  new  policy  regarding  the  milling  industry  was  inaugurated 

1  "America's  Grain  Trade,"  Herbert  Hoover's  Address  at  the  Conference  of  the 
Grain  Trade  of  the  United  States,  April  30-May  I,  1918,  p.  5. 

10 


232 


PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

PRICE  OF  WHEAT  AND  BULK  FLOUR  AT 
MINNEAPOLIS 


^15.00 


1400 


13.00 


12.00 


11.00 


10.00 


900 


8.0O 


'.00 


6.00 


qOVLRNMENT 


PRICE  TO  FARMERS    fOR  4)4  BiJSHELi   OF  WHEAT.     1917 


X 


(freight    included  To    MINNEAPOLIS) 


1^::^ 


rw^t 


AVE«AQE_PR!f  ^  FAWNER  REA_LaED_F0Rj4^  BUSHELS_  OF  jyHEAnNj9l6_^ 


(FPtlGKTINaUDEO  TO  MINNEAPOLU) 


We«k 


AUGUST 


IS     23     30 


»4     21      2«     4 


SEPTEMBER 


OCTOBER 


NOV 


Approximately  4I  Bushels  of  Wheat  are  Required  for 
I  Barrel  of  Flour 

on  July  I,  1918.  Instead  of  a  permissible  profit  of  25  cents  a 
barrel,  millers  under  the  new  arrangement  were  allowed  to 
receive  for  the  milling  of  the  new  harvest  wheat  $1.10  a  bar- 
rel, out  of  which  they  were  to  pay  all  their  expenses.  ^  This 
temporary  arrangement  was  superseded  a  few  weeks  later  by 
a  plan  of  flour  and  feed  price  control  which  relieved  the  mills 
"of  the  trouble  of  calculating  prices  through  the  announce- 
ment of  a  fair  price  at  every  mill  point  in  the  United  States. 2 

1  Commercial  and  Financial  Chronicle,  June  29,  1918,  p.  2705. 

2  Official  Statement  of  the  U.  S.  Food  Administration,  September  12,  1918,  pp. 

lO-II. 


THE    UNITED    STATES 


233 


Prices  at  typical  points  for  carload  lots,  in  bulk,  at  the  mill, 
were  established  as  follows: 


Milling  Points 


Flour 


Boston $10 .  65 

New  York 10.61 

Philadelphia 10  •  57 

Baltimore 10  •  55 

Nashville,  Tenn 10 .38 

Atlanta,  Ga 10 .  73 

Louisville,  Ky 10 .30 

New  Orleans,  La 10.16 

Galveston,  Tex 10 .23 

Buffalo,  N.  Y 10 .33 

Cleveland,  Ohio 10 . 33 

Chicago,  111 10.14 

Minneapolis,  Minn 10.01 

Aberdeen,  S.  Dak 9  •  65 

Wichita,  Kans 9-58 

Fort  Worth,  Tex 10.12 

Omaha,  Nebr 9 .89 

Kansas  City,  Mo 9 .  89 

St.  Louis,  Mo 10 .09 

Indianapolis,  Ind 10.27 

Denver,  Colo 9  29 

Little  Rock,  Ark 9 .  86 

Detroit,  Mich 10  .31 

Sioux  City,  Iowa 9-78 

Oklahoma  City,  Okla 9 .63 

Minot,  N.  Dak 9 .65 

Kalispell,  Mont 9  .33 

Memphis,  Tenn 10.28 

Spartanburg,  S.  C 10 .  85 

Charleston,  W.  Va 10 .43 

Albuquerque,  N.  Mex 10 .  56 

Salem,  Ore 9-75 


Bran 


$30.66 
30.26 
29.86 
29.66 
27.46 
31.06 
26.86 
27.26 
29.66 
28.16 
27.76 
25.26 
23  36 

1995 
19.41 
28.66 
22  .26 
22  .26 
24.46 
26.86 
16.92 
26.76 
27.46 
21.56 
26.66 
19.69 
17.32 
26.46 
32.26 
28.36 

33-35 
21 .27 


Mid- 

Mixed 

dlings, 

Feed 

Shorts, 

Red  Dog 

131-91 

$32.66 

31-51 

32.26 

3I-II 

31-86 

30.91 

31.66 

28.71 

29.46 

32-31 

33-06 

28.11 

28.86 

28.51 

29.26 

30.91 

31.66 

29.41 

30.16 

29.01 

29.76 

26.51 

27.26 

24.61 

25-36 

21 .20 

21.95 

20.66 

21 .41 

29.91 

30.66 

23-51 

24.26 

23-51 

24.26 

25-71 

26.46 

28.11 

28.86 

18.17 

18.92 

28.01 

28.76 

28.71 

29.46 

22.81 

23-56 

27.91 

28.66 

20.94 

21 .69 

18.57 

19.32 

27.71 

28.46 

33-51 

34-26 

29.61 

30.36 

34.60 

35-35 

22.52 

23-57 

These  prices  were  not  fixed  prices,  but  were  figures  named  as 
maximums  at  which  it  was  considered  "fair"  by  the  Food 
Administration  that  sales  be  made.  It  was  expected  that 
competition  would  result  in  many  sales  being  made  at  under 
these  figures.  Margins  over  and  above  the  carload  cash  or 
draft  basis,  were  specified  and  limited;  they  averaged  approxi- 
mately 55  cents  where  flour  was  packed  in  No.  98  or  larger 
sacks;  the  cost  of  small  containers  ran  proportionately  higher, 
going  up  as  high  as  $2.40  per  barrel  over  the  bulk  price  where 
flour  was  shipped  in  No.  2  packages. 

In  the  early  part  of  December  the  Food  Administration 
announced  the  cancellation  of  all  flour  milling  regulations, 


234  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

including  fair  price  schedules  and  price  and  quantity  restric- 
tions on  sale  of  wheat  flour  by  millers.  ^ 

Control  of  Wholesaling  and  Retailing 

The  control  of  flour  wholesalers  and  flour  jobbers  was 
covered  by  the  Presidential  Proclamation  of  October  i ,  which 
placed  the  dealers  in  flour  under  license.  Like  the  distribu- 
tors of  other  necessaries,  they  were  limited  in  their  charges 
to  a  price  which  would  give  them  a  reasonable  margin  over 
cost  without  regard  to  the  market  or  replacement  value  of  the 
commodity.  This  margin  was  not  to  be  greater  than  that 
which  they  had  normally  enjoyed  in  the  prewar  period. ^ 
The  Food  Administration  acknowledged  that  the  departure 
from  the  market  or  replacement  value  was  a  radical  one,  but 
it  deemed  it  necessary  to  resort  to  it  because  of  shortage  of 
supplies,  the  vast  export  demand  and  the  constantly  increas- 
ing home  demand. 

The  licensees  were  required  to  keep  the  flour  moving  to  the 
consumer  in  as  direct  a  line  as  possible  and  without  unreason- 
able delay;  this  was  done  in  order  to  prevent  resales  within 
the  trade  which  tend  to  increase  the  price  to  the  retailer  or 
the  consumer. 

In  order  to  prevent  speculation  and  hoarding,  licensees 
were  strictly  limited  to  a  30  days'  supply.  Moreover,  they 
were  forbidden  to  sell  to  any  person,  licensed  or  unlicensed,  if 
the  sale  was  to  give  such  person  more  than  a  thirty  days' 
supply. 

According  to  the  findings  of  the  Federal  Trade  Commission, 
the  gross  profits  of  the  car  lot  distributors  increased  from  22 
cents  per  barrel  in  the  calendar  year  19 14  to  54.4  cents  per 
barrel  in  the  first  half  of  the  calendar  year  191 7.  As  the  ex- 
penses, exclusive  of  salaries,  advanced  only  from  10  cents  to 
13.5  cents,  the  net  profits  per  barrel  rose  from  18  cents  to  41 
cents  and  the  rate  of  profit  on  investment  increased  from  31.5 
per  cent  to  60.7  per  cent.^     The  gross  profits  of  small  lot 

1  Industrial  News  Survey,  December  16-23,  1918,  p.  7. 
^  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  45. 
'  Report  of  the  Federal  Trade  Commission  on  Flour  Milling  and  Jobbing,  pp. 
7,  18. 


THE    UNITED    STATES  235 

jobbers  increased  during  the  same  period  from  52  cents  per 
barrel  to  86.3  cents  per  barrel,  which  represented  an  advance 
in  the  net  profits  from  21  cents  to  47.5  cents  and  In  the  rate 
of  profit  on  Investment  from  26.2  per  cent  to  51.9  per  cent.^ 

Under  the  regulations  the  maximum  gross  profit  of  car  lot 
jobbers  had  been  fixed  at  25  cents  a  barrel  and  of  small  lot 
jobbers  at  from  50  to  75  cents  per  barrel.  These  were  gross 
profit  margins,  leaving  the  jobbers  free  to  earn  what  they 
could  by  efficient  operation. ^ 

Retailers  were  allowed  margins  of  80  cents  to  $1.20  cents 
per  barrel  over  cost.^ 

New  licensing  regulations,  which  became  effective  Novem- 
ber 4,  1 91 8,  allowed  maximum  margins  on  sales  by  whole- 
salers to  retailers  equal  to  60-90  cents  per  barrel. 

Upon  the  signing  of  the  armistice  the  Food  Administration 
announced  that  regulations  restricting  margins  of  profit  on 
flour  and  mill  feeds  and  regulations  prohibiting  profiteering, 
hoarding  and  unfair  practices  were  to  remain  In  effect  until 
the  signing  of  the  treaty  of  peace. ^ 

Bread 

The  average  retail  price  of  a  pound  loaf  of  bread  rose  from 
5  cents  on  July  15,  1914,  to  6.4  cents  on  November  15,  1914; 
the  subsequent  advances  brought  the  price  of  the  pound  loaf 
on  November  15,  of  1915,  1916,  1917  and  1918  to  7  cents,  8.4 
cents,  9.9  cents  and  9.8  cents  respectively.^  Thus  at  the  time 
of  the  signing  of  the  armistice  the  price  of  bread  was  about 
80  per  cent  higher  than  it  had  been  just  before  the  outbreak 
of  war.  The  increase  In  the  price  in  many  localities  was  much 
greater  than  the  general  average  Indicates. 

When  the  Food  Administration  was  organized  it  placed  the 
control  over  the  production  and  distribution  of  bread  in  the 
hands  of  a  Baking  Division.  The  latter  took  steps  almost 
immediately  to  standardize  baker's  bread,  both  from  the  stand- 

1  Report  of  the  Federal  Trade  Commission  on  Flour  Milling  and  Jobbing  p.  7. 

2  Ibid.,  p.  10. 

'  Commercial  and  Financial  Chronicle,  August  17,  1918,  p.  651. 

*  Industrial  News  Survey,  Vol.  ii,  No.  43,  p.  7. 

*  Monthly  Labor  Review,  January,  1919,  p.  89. 


236  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

point  of  weight  and  of  the  ingredients  used  in  the  baking. 
The  object  of  standardization  was  to  reduce  the  cost  of  pubHc 
baking  and  distribution,  to  reduce  the  waste  of  flour  and  to 
Hmit  the  use  of  sugar  and  lard  in  the  preparation  of  bakery 
bread.'  The  minimum  weight  of  a  loaf  was  fixed  atone 
pound;  larger  loaves  could  weigh  i|,  2  and  4  pounds.  Previ- 
ous to  this  ruling  there  were  38  different  weights  on  the 
market. 

The  most  prevalent  system  of  bread  distribution  in  this 
country  before  the  war  was  the  sale  of  bread  by  the  grocery- 
man,  who  delivered  it  and  charged  for  it;  the  retailer  himself 
obtained  the  bread  from  a  wholesale  bakery.  Bread  thus 
distributed  had  cost  the  consumer  from  nine  to  fifteen  cents 
per  pound.  The  other  less  expensive  systems  of  distribution 
were  the  "cash  and  carry"  stores  and  the  small  baker  who 
delivered  his  own  product  directly  to  the  consumer.  It  was 
anticipated  by  the  Food  Administration  (an  anticipation  that 
did  not  materialize)  that  "cash  and  carry"  grocery  stores 
conducting  their  own  bakeries  would  sell  the  one  pound  loaf 
for  about  7  cents. 

In  New  York  the  Federal  Food  Board  on  March  20,  191 8, 
after  a  series  of  conferences  with  representatives  of  the  baking 
industries,  authorized  a  price  for  the  16  ounce  loaf,  unwrapped, 
of  8  cents  wholesale  and  9  cents  retail  and  wrapped,  8^  cents 
wholesale  and  10  cents  retail.  On  September  20,  1918,  a 
notice  was  sent  to  all  Federal  Food  Administrators,  stating 
that  an  investigation  by  the  Baking  Division  of  manufactur- 
ing cost  and  wholesale  and  retail  prices  of  bread  warranted 
establishing  a  maximum  retail  price  for  a  one  pound  loaf  at 
10  cents  and  a  one  and  half  pound  loaf  at  15  cents.  These 
were  maximum  prices  to  be  enforced  in  each  State  and  to 
apply  to  either  cash  and  carry  or  credit  and  delivery  sales. 
The  investigation  showed  wholesale  prices  of  8  and  12  cents  in 
many  sections.  These  wholesale  prices  warranted  a  retail 
price  of  9  cents  for  the  pound  loaf  and  14  cents  for  the  pound 
and  a  half  loaf,  cash  and  carry. ^ 

^  U.  S.  Food  Administration,  Policies  and  Plan  of  Operation,  p.  49. 

^  U.  S.  Food  Administration  Official  Statements,  October  i,  1918,  p.  17. 


CHAPTER   V 

Sugar 

The  abnormal  conditions  in  the  American  sugar  industry 
which  prevailed  from  the  beginning  of  the  great  war  were  due 
largely  to  the  destruction  of  many  European  beet  fields  and 
factories,  the  production  in  Europe  having  declined  from 
8,179,013  tons  in  1913-14,  to  7,583,215  in  1914-15,  5,077, 760 
in  1915-16  and  4,555,407  in  1916-17.1  According  to  the 
statement  of  the  Food  Administration,  sugar  beet  production 
has  declined  in  all  the  European  sugar  producing  countries 
as  follows:- 

Country  Equivalent  in  Short  Tons 

1917-18  1916-17  1915-16  1914-15 

Germany. 1,760,000  1,705,000  1,663,000  2,860,000 

Austria-Hungary 737.000  1,038,000  1,033,000  1,762,000 

France 248,000  228,000  166,000  370,000 

Russia,  Ukraine,  Poland,  etc 880,000  1,458,000  1,838,000  2,176,000 

Belgium 140,000  149,000  124,000  224,000 

Holland 220,000  296,000  267,000  333-000 

Sweden 146,000  151,000  140,000  169,000 

Denmark 147,000  124,000  138,000  168,000 

Other  Countries 220,000  275,000  330,000  404,000 

Totals 4,498,000    5,424,000    5,699,000    8,466,000 

The  situation  was  aggravated  by  a  gradual  elimination  of 
distant  areas  as  sources  of  supply,  the  lack  of  transportation 
facilities  making,  for  instance,  the  enormous  tonnage  of  Javan 
sugar  unavailable  for  European  and  American  consumers. 

It  should  be  noted  in  this  connection  that  the  largest  im- 
porter of  sugar,  the  United  Kingdom,  received  before  the  war 
54.2  per  cent  of  her  sugar  supply  from  Germany  and  Austria- 
Hungary^  and  that  France  and  Italy,  which  before  the  war 
obtained  most  of  their  sugar  from  their  home  production, 

1  Conditions  in  the  Sugar  Market,  January-October,  1917,  The  American 
Sugar  Refining  Co.,  p.  8. 

2  Official  Statement  of  the  U.  S.  Food  Administration,  December  i,  1918,  p.  10. 
» Ihid.,  September  12,  1918,  p.  8. 

237 


2^,8  PRICES   AND   PRICE    CONTROL   DURING   THE   WAR 

were  forced  during  the  war  period  to  rely  upon  importations 
in  order  to  cover  the  major  part  of  their  needs. 

The  Cuban  market,  which  prior  to  the  war  had  been  almost 
the  exclusive  field  of  the  United  States  refiners,  became  the 
center  of  a  feverish  purchasing  activity  on  the  part  of  the 
Allied  governments  and  of  neutrals.  The  quantity  of  sugar 
imported  into  the  United  Kingdom  and  the  continent  of 
Europe  increased  from  304,565  tons  in  1913-14  to  730,993 
tons  in  1915-16.1  To  what  extent  the  Allies  depended  through 
1 91 7  and  1 91 8  for  their  sugar  upon  Cuba  and  the  United 
States  may  be  seen  from  the  following  table  :^ 

Prewar  An- 
nual Average  1917                  ^1918 
(1909-13) 
Exports  of  unrefined  sugar  from:  ~ 

Cuba 143,824  956,765             1,200,000 

Hawaii..... ••-                    30,000 

Philippines 56,785                    

Exports   of    refined    sugar   from    the 

United  States 23,167  264,167                150,000 

»  Estimated  in  September,  19 18. 

Just  before  the  outbreak  of  the  great  war  sugar  was  selling 

in  the  United  States  at  a  lower  figure  than  it  had  been  for 

many  years.     Average  yearly  wholesale  and  retail  prices  for 

granulated  sugar  were: ' 

Wholesale  Prices  Average  Retail  Price 

In  1911 5 -33  per  pound  6. 10  per  pound 

"  1912 5.05     "        "  6.30 

"  1913 4-27     "        "  550 

"  1914 4-71     "        "  5.90     " 

Sugar  was  quoted  only  a  little  above  $4.00  per  1 00  pounds  in  New 
York  when  the  war  broke  out.  Within  a  month  it  had  risen 
to  $7.10,  from  which  height  it  soon  temporarily  fell;  the  aver- 
age wholesale  price  for  191 5  was  $5.56  and  for  191 6,  $6.88.  In 
April,  1 91 7,  the  price  was  $8.14,  as  compared  with  $3.67  dur- 
ing the  same  month  in  1914;  in  August,  1917,  it  went  up  to 
$9.75;  the  retail  price  at  the  same  time  reached  in  some  places 
20  to  25  cents  a  pound.     Mr.  Hoover's  efforts  to  control  the 

^  Conditions  in  the  Sugar  Market,  January-October,  igij,  PP-  I2-I3' 

2  Official  Statement  of  the  U.  S.  Food  Administration,  September  12,  1918,  p.  9. 

2  The  World's  Sugar  Supply,  National  Bank  of  Commerce  in  New  York,  p.  38. 


THE   UNITED    STATES  239 

supply  and  to  stabilize  the  price  of  sugar  began  almost  from 
the  very  first  days  of  his  appointment  to  the  ofiice  of  Food 
Administrator,  on  August  lo,  191 7-  The  legislature  did  not 
give  him  power  to  fix  prices  directly  or  to  purchase  sugar,  but 
he  could  declare  profits  extortionate  and  could  revoke  licenses 
of  those  who,  according  to  him,  violated  the  law.  Mr. 
Hoover  adopted  the  plan  of  entering  into  voluntary  agree- 
ments with  producers  regarding  maximum  prices  and  margins. 
On  August  15  he  named  George  M.  Ralph  as  chief  of  the  Sugar 
Division  of  the  Food  Administration.  On  August  16  the 
New  York  Coffee  and  Sugar  Exchange  at  Mr.  Hoover's  sug- 
gestion suspended  all  trading  in  sugar  for  future  delivery, 
and  shortly  thereafter  the  beet  sugar  refiners  were  summoned 
to  Washington.^  A  number  of  meetings  were  held,  at  which 
the  representatives  of  the  domestic  beet  sugar  industry  agreed 
to  sell  the  1917-18  crop  of  beet  sugar  at  $7.25  cane  basis, 
seaboard  refining  points. 

Under  this  arrangement  the  price  paid  for  beet  sugar  in  the 
interior  of  the  country  was  equal  to  $7.25,  plus  the  cost  of 
transportation  from  the  nearest  seaboard  refinery;  the  further 
from  the  seaboard  the  sugar  was  sold  the  higher  was  the 
price;  this  was  in  conformity  to  the  practice  before  the  war, 
beet  sugar  always  having  been  sold  at  interior  points  at  prices 
to  meet  the  competition  of  imported  sugars,  rather  than  in 
relation  to  the  cost  of  production. - 

According  to  Mr.  Hoover's  statement,  the  basic  price  of 
$7.25  was  arrived  at  after  the  examination  of  costs  in  various 
factories;  the  cost  was  found  to  range  from  $4.00  to  $7.00  per 
100  pounds  and  the  price  agreed  upon  was  such  as  to  permit 
the  highest  cost  producer  to  continue  in  business,  thus  assuring 
the  maintenance  of  a  maximum  production.  On  December 
12  the  price  was  changed  to  $7-35;  this  change  was  made  in 
order  to  bring  the  price  of  beet  sugar  in  greater  conformity 
with   the  cane  basis,  as  established  by  an  agreement  with 

1  R.  G.  Blackey:  "Sugar  Prices  and  Distribution  under  Food  Control,"  The 
Quarterly  Journal  of  Economics,  August,  1918,  p.  568.  Also  Commercial  and  Finan- 
cial Chronicle,  March  2,  1918,  p.  876. 

2  Ibid:  op.  cit.,  p.  575. 


240  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

Cuban  producers.     The  price  was  raised  to  $7.45  on  January 
8,  1918,  and  again  in  the  latter  part  of  June  to  $7-50-^ 

The  distribution  of  beet  sugar  was  entrusted  to  a  Sugar 
Distributing  Committee  appointed  by  Mr.  Hoover;  this  com- 
mittee was  composed  of  representatives  of  beet  sugar  pro- 
ducers and  brokers  of  the  beet  sugar  territory  of  the  United 
States.  Local  representatives  of  this  central  organization 
were  established  at  many .  points  throughout  the  country ; 
they  allocated  the  sugar  to  dealers  and  saw  to  it  that  govern- 
ment regulations  were  complied  with.  Sugar  was  shipped  to 
dealers  from  the  nearest  factory.  All  those  engaged  in  the 
business  of  importing  sugar,  of  manufacturing  sugar  from 
sugar  cane  or  beets  or  of  refining  sugar  were  required  to  secure 
on  or  before  October  i,  191 7,  a  license. ^ 

Shortly  after  an  agreement  was  reached  with  beet  sugar 
factories,  steps  were  taken  to  bring  under  control  all  other 
sugar  interests.  On  September  21,  1917,  the  International 
Sugar  Committee  was  created,  which  included  the  representa- 
tives of  England,  France,  Italy  and  Canada,  as  well  as  of  the 
United  States.  An  international  agreement  was  necessary 
in  order  to  deal  with  the  Cuban  situation.  The  committee 
took  charge  of  the  buying  and  transportation  of  Cuban  sugar 
to  the  Allies,  the  neutrals  and  the  American  cane  sugar  refin- 
ers. The  sugar  set  aside  for  the  United  States  was  allotted 
to  the  refiners  by  the  American  Refiners'  Committee,  com- 
posed of  refiners  and  their  sales  agents.  The  subsequent  dis- 
tribution of  cane  sugar  was  left  in  the  hands  of  the  Food 
Administration.  At  the  time  of  the  appointment  of  the 
International  Committee,  the  amount  of  unsold  Cuban  sugar 
was  very  small,  not  over  50,000  tons.  In  an  effort  to  keep 
down  the  price  for  the  191 7-1 8  crop,  concerning  which  the 
Food  Administration  was  then  negotiating  with  Cuban  pro- 
ducers, the  committee  requested  the  American  refiners  to 
keep  out  of  the  Cuban  market.  The  committee  itself  did  not 
go  in  its  offers  to  producers  beyond  $6.90  per  100  pounds, 

^  U.  S.  Food  Administration,  Proclamations  and  Executive  Orders  by  the  Presi- 
dent, p.  7. 

*  Industrial  News  Survey,  July  1-8,  19 18,  p.  5. 


THE    UNITED    STATES  24 1 

delivered  at  New  York;  this  was  about  $i.oo  below  the  maxi- 
mum price  reached  in  August.  While  negotiations  were 
pending,  some  of  the  eastern  refiners  in  Atlantic  coast  towns 
had  to  close  down  for  lack  of  raw  sugar.  There  was  also 
a  lack  of  refined  sugar  and  in  many  places  people  were 
obliged  to  pay  12  to  15  cents  a  pound- or  more.^  As  a  result, 
an  investigation  into  the  shortage  of  sugar  was  instituted  by 
the  Senate.  During  the  hearings  before  the  Investigating 
Committee  in  December,  191 7,  accusations  were  made  by 
Mr.  Claus  A.  Spreckels  that  the  shortage  of  sugar  was  due 
to  Mr.  Hoover  forbidding  the  purchase  of  raw  material 
at  a  price  higher  than  the  one  fixed  by  the  Sugar  Committee; 
it  was  also  charged  that  by  announcing  a  prospective  sugar 
shortage  Mr.  Hoover  had  caused  a  panic  among  consumers, 
with  a  subsequent  hoarding  of  the  staple,  and  that  therefore 
he  himself  was  partially  responsible  for  the  shortage.  The 
Investigating  Committee,  under  the  chairmanship  of  Senator 
Reed,  seemed  to  be  very  reluctant  in  admitting  Mr.  Hoover's 
statement  in  defense  of  his  position.  The  publication  of  this 
statement  was  authorized  by  the  President  without  the  per- 
mission of  Senator  Reed's  Committee.  In  his  reply  to  the 
critics,  Mr.  Hoover  attributed  the  shortage  in  the  United 
States  to  the  heavy  movement  of  sugar  from  the  western 
hemisphere  to  Europe.  While  before  the  war  the  exports 
from  this  hemisphere  to  the  Allies  were  only  about  300,000 
tons  annually,  the  exports  to  them  in  191 7  were  about 
1,400,000  tons;  but  for  this  fact,  according  to  Mr.  Hoover, 
there  would  not  have  been  any  shortage. 

A  certain  admission  that  the  shortage  of  sugar  in  the  east 
was  due  at  least  in  part  to  price  regulations  was  made  by  the 
Food  Administration  when  it  raised  the  price  of  beet  sugar  to 
$8.15.  Committed  to  a  definite  price  and  assured  of  this 
price  all  the  year  round,  the  beet  sugar  factories  were  not 
shipping  sugar  to  the  Atlantic  seaboard  as  they  ordinarily 
would  have  done  in  case  of  a  shortage  there. 

Furthermore,  the  Atlantic  coast  received  much  less  Louisiana 

'  Commercial  and  Financial  Chronicle,  March  2,  19 18,  p.  876. 


242  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

sugar  than  usual.  This  was  due  to  several  causes:  first,  the 
prices  set  enabled  the  Louisiana  producers  to  dispose  of  their 
sugar  to  better  advantage  by  clarifying  and  washing  it  on  their 
plantations  and  by  selling  it  in  their  own  State  to  the  manu- 
facturers of  confections  than  by  shipping  it  to  the  Atlantic 
seaboard  refiners;  second,  a  part  of  the  Louisiana  crop  was 
damaged  by  frost;  third,  a  larger  amount  of  the  Louisiana 
sugar  than  contemplated  was  exported  to  the  Allies.^ 

During  the  negotiations  for  the  191 7-1 8  crop,  the  Cuban 
representatives  held  out  for  $5.25  f.  o.  b.  Cuban  ports,  while 
the  American  representatives  were  in  favor  of  paying  $4.50; 
the  average  cost  of  production  was  found  to  be  $3.38.  After 
lengthy  negotiations,  the  deal  was  finally  closed  at  $4.50 
f.  o.  b.  Cuban  ports  plus  30  cents  per  hundredweight  for 
freight.-  This  price,  like  the  one  agreed  upon  in  the  case  of 
beet  sugar  and  also  of  the  Louisiana  cane  sugar  (the  price  of 
which  was  fixed  at  $6.35  f.  o.  b.  New  Orleans)  was  sufficiently 
high  not  only  to  give  a  good  profit  to  average  producers,  but 
also  to  keep  in  business  most  of  the  highest  cost  producers. 

Sugar  refiners  agreed  to  work  for  a  differential  of  $1.30  per 
100  pounds;  before  October  i,  191 7,  the  differential  was  $1.60 
to  $2.05.^  The  figure  of  $1.30  was  Arrived  at  by  taking  the 
average  margin  for  five  years  previous  to  and  including  1914 
and  adding  the  increased  cost  of  operation  which  refiners  had 
to  face.^  The  amount  agreed  upon  included  the  brokerage 
of  3  to  5  cents  which  refiners  pay  agents  for  selling  their  sugar 
to  wholesalers.  As  to  the  latter,  they  w^ere  limited  in  all  their 
dealings  to  their  prewar  normal  profits,  which  they  inter- 
preted to  mean  in  the  case  of  sugar  as  25  cents  a  hundred 
pounds.  Retailers  were  kept  within  the  limits  of  reasonable 
prices  through  fear  of  having  their  supply  of  sugar  cut  off  by 
the  jobbers  as  well  as  through  their  desire  to  live  up  to  the 
rulings  of  the  Food  Administration. 

1  R.  G.  Blackey:  "Sugar  Prices  and  Distribution  under  Food  Control,"  Quar- 
terly Journal  of  Economics,  August,  1918,  p.  590. 

*  Commercial  and  Financial  Chrotiicle,  March  2,  191 8,  p.  876. 
'  Ibid.,  June  27,  1918,  p.  261 1. 

*  U.  S.  Bureau  of  Labor,  Monthly  Labor  Review,  November,  1917,  p.  82. 


THE    UNITED    STATES  243 

The  rationing  of  manufacturers  using  sugar  began  in  Octo- 
ber, 1 91 7,  when  those  producing  nonessentials  were  limited  to 
50  per  cent  of  their  normal  requirements.  A  subsequent 
ruling  directed  that  manufacturers  of  nonessentials  starting 
after  April  i,  1918,  should  be  allotted  no  sugar  whatever. 
There  was  no  definite  rationing  of  consumers  until  the  middle 
of  1 91 8.  Previous  to  this  date,  requests  had  been  made  that 
the  consumers  curtail  their  consumption  of  sugar  voluntarily. 
The  War  Emergency  Food  Survey  of  August  31,  191 7,  so  far 
as  it  related  to  sugar,  showed  that  the  amount  of  sugar  con- 
sumed in  the  United  States  for  the  year  ending  August  31, 
1 91 7,  was  approximately  9,100,000,000  or  88.3  pounds  per 
capita,  as  compared  with  an  average  annual  consumption  of 
the  five  year  period  ending  in  1916  of  8,300,000,000  or  84.7 
pounds  per  capita.^  In  view  of  the  shortage,  the  Food  Ad- 
ministration suggested  at  first  that  the  consumption  of  sugar 
be  cut  to  67  pounds  per  person,  but  it  soon  realized  that  such 
a  consumption  could  not  be  maintained. 

On  June  24,  1918,  Mr.  Hoover  issued  a  statement  acknowl- 
edging that  the  sugar  situation  was  more  difficult  than  the 
Food  Administration  anticipated  at  the  beginning  of  the  year. 
He  assigned  as  the  causes  of  the  difficulty,  first,  increased  ship- 
ping needed  by  the  growing  American  army  in  France,  which 
necessitated  the  curtailment  of  sugar  transportation,  not 
only  from  remote  markets,  but  even  from  Cuba;  second,  the 
smaller  yield  than  was  expected  from  the  accessible  sugar 
producing  areas,  such  as  certain  West  Indian  Islands,  as  well 
as  from  the  domestic  beet  sugar  fields  and  from  Louisiana; 
third,  the  destruction  of  a  number  of  beet  sugar  factories  in 
the  battle  areas  of  France  and  Italy;  fourth,  the  sinking  of  a 
considerable  amount  of  sugar  by  submarines. ^ 

The  refiners'  reserve  stocks,  which  are  in  normal  times  used 
to  bridge  the  gap  in  the  eastern  part  of  the  country  between 
the  end  of  the  arrivals  of  cane  sugar  from  outside  and  the 

1  U.  S.  Dept.  of  Agriculture,  Circular  No.  96,  Sugar  Supply  of  the  United  States, 
p.  2. 
»  U.  S.  Bureau  of  Labor,  Monthly  Labor  Review,  August,  1918,  p.  139. 


244 


PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 


arrivals  of  beet  sugar  from  the  Western  States,  dropped  in 
August  to  about  40  per  cent  of  the  normal  reserve  supply. 
The  chart  compares  the  movement  of  refiners'  stocks  of  raw- 
sugar  in  1 91 8  with  the  preceding  year  and  with  the  prewar 
average.^ 

REFINERS'  STOCKS  OF   RAW  SUGAR 

[In  long  ions  of  2,240  pounds  each] 


Jan.    Feb.      March     April      May       June      July     Aog.      6ep+. 


^  Official  Statement  of  the  U.  S.  Food  Administration,  September  12,    19 18, 
pp.  9-10. 


THE    UNITED    STATES  245 

A  reduction  in  the  consumption  of  sugar  in  the  United  States 
was  declared  to  be  a  necessity,  as  ortly  1,600,000  tons  of  sugar 
were  to  be  available  for  distribution  in  the  country  until  the 
end  of  the  year.  According  to  regulations,  which  became 
effective  on  July  i,  the  householders  were  limited  to  3  pounds 
of  sugar  per  month  per  person,  with  a  special  allowance  of  25 
pounds  of  sugar  for  home  canning  purposes.  This  meant  a 
reduction  of  some  25  per  cent  from  normal  consumption,  but, 
as  the  Food  Administration  remarked,  it  was  still  nearly 
double  the  ration  in  the  Allied  countries  and  was  ample  for 
every  economical  use. 

In  order  to  secure  justice  in  distribution  and  to  make  the 
restrictive  plans  as  effective  as  possible,  no  manufacturer  or 
wholesaler  of  sugar  was  allowed  after  July  i  to  sell  any  sugar 
except  to  buyers  who  secured  a  certificate  from  the  local  food 
administrators  indicating  the  quantity  they  were  allowed  to 
buy.     The  users  of  sugar  were  divided  into  five  classes: 

A.  Candy  makers,  soft  drink,  chocolate  and  cocoa  manu- 
manufacturers,  tobacco  manufacturers,  makers  of  flavoring 
extracts,  syrups,  sweet  pickles,  etc. 

B.  Commercial  canners  of  vegetables,  fruits  and  milk, 
makers  of  drugs,  explosives,  etc. 

C.  Public  eating  places,  as  hotels,  restaurants,  boarding 
houses,  dining  cars,  boats,  clubs,  etc.  "^ 

D.  Manufacturers  of  all  bakery  products. 

E.  Retailers  and  others  selling  for  direct  consumption.^ 
Each  class  was  entitled  to  a  certain  allotment  of  sugar  for 

the  months  of  July,  August  and  September,  1918,  the  allot- 
ment varying  from  50  per  cent  of  the  amount  of  sugar  they 
used  in  the  corresponding  months  of  191 7  (Class  A)  to  all  the 
sugar  that  the  manufacturers  required  (Class  B). 

No  sugar  was  allowed  to  leather  tanners  and  to  manufac- 
turers of  nonedibles. 

On  July  13,  1918,  at  the  direction  of  the  President,  the 
United  States  Sugar  Equalization  Board  was  formed  for  the 
purpose  of  better  controlling  distribution  and  prices  of  sugar. 

'  U.  S.  Department  of  Labor,  Monthly  Labor  Review,  pp.  139-140. 


246  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

The  board  was  empowered  to  purchase,  manufacture,  sell, 
store  and  handle  raw  and  refined  cane  and  beet  sugar,  syrups 
and  molasses.^  The  Equalization  Board  entered  into  an 
agreement  with  Cuban  sugar  producers  and  became  the  sole 
American  purchaser  of  Cuban  sugar  at  fixed  prices.  In  191 7, 
48  per  cent  of  the  sugar  supply  of  the  United  States  came  from 
Cuba;  in  1916,  out  of  a  total  consumption  in  the  United 
States  of  3,658,607  tons,  1,666,548  tons  were  supplied  by 
Cuba,  and  in  1915  the  proportion  was:  total  consumption, 
3,801,531,  imports  from  Cuba,  1,841,602.2  The  government 
expected  by  controlling  the  Cuban  supply  to  have  an  effective 
grip  on  the  sugar  industry  of  the  country.  The  American 
refiners  of  Cuban  sugar  agreed  to  buy  raw  sugar  exclusively 
from  the  board  at  fixed  prices. 

Toward  the  middle  of  191 8  the  sugar  refining  companies 
applied  for  an  increased  differential  for  refining,  claiming  that 
increased  cost  of  labor  and  supplies  rendered  margins  deter- 
mined upon  in  October,  191 7,  inadequate.  A  committee 
appointed  to  investigate  refining  costs  reported  that  an  in- 
creased margin  was  justifiable  and  it  was  raised  in  September, 
1918,  from  $1.30  a  hundred  pounds  to  $1.45.  At  the  same 
time  the  cane  sugar  wholesale  price  was  fixed  by  the  Equaliza- 
tion Board  at  9  cents  a  pound,  f.  o.  b.  seaboard  refining 
points.*  Wholesalers  and  retailers  were  to  sell  on  the  old 
basis  until  the  exhaustion  of  their  stocks  of  lower  priced  sugar. 
The  price  was  raised  again  in  December,  191 8 — this  time  to 
10  cents  a  pound. ^ 

In  view  of  a  continued  shortage  of  sugar  the  per  capita  con- 
sumption of  sugar  was  cut  from  3  pounds  to  2  pounds  per 
month,  the  reduction  to  remain  in  force  from  August  i  to 
January  i.  Other  changes  in  the  sugar  regulations  were  the 
increase  of  the  wholesalers'  margin  from  25  cents  to  35  cents 
per  100  pounds,  and  the  raise  in  the  New  York  price  of  Cuban 

'  U.   S.   Food   Administration,   Proclamations  and   Executive  Orders  by  the 
President,  p.  30. 

*  Conditions  in  the  Sugar  Market,  January-October,  1917,  The  American  Sugar 
Refining  Co.,  p.  10. 

^  Commercial  and  Financial  Chronicle,  September  14,  19 18,  p.  1056. 

*  Ibid.,  December  15,  1918,  p.  2325. 


THE    UNITED    STATES  247 

raws  by  5  cents  per  100  pounds;  the  latter  was  done  to  cover 
extra  war  risks,  after  the  appearance'  of  a  few  German  sub- 
marines in  American  waters. 

The  handHng  of  the  sugar  situation  on  the  whole  seems  to 
have  been  conducive  to  a  more  equal  distribution  of  sugar 
among  the  different  sections  of  the  country  as  well  as  among 
the  various  classes  of  the  population.  Mr.  Hoover  claimed 
that  but  for  his  regulations  the  price  of  sugar  would  have 
soared  to  20  and  25  cents  per  pound  retail;  this  would  have 
led  to  a  transfer  of  over  $200,000,000  from  consumers  to 
profiteers.  It  is  difficult  to  state  what  the  ultimate  effect  of 
the  fixing  of  basic  prices  for  raw  sugar  and  of  margins  to 
refiners  and  distributors  would  have  had  upon  the  supply  of 
sugar  had  the  war  and  the  Food  Administration's  rulings 
lasted  longer  than  they  did.  According  to  a  statement  issued 
by  the  Department  of  Agriculture,  there  were  planted  in  191 8 
under  sugar  beets  689,700  acres;  this  was  117,000  acres  less 
than  in  1917  and  79,000  acres  less  than  in  I9i6,''  a  decrease  of 
14  per  cent  and  10  per  cent  respectively. 

These  figures  do  not  square  with  those  given  by  the  Statis- 
tical Division  of  the  United  States  Food  Administration, 
according  to  which  the  acreage  and  the  production  of  beet 
sugar  for  the  United  States  were  as  follows  :^ 

Acreage  Production 

1915 611,000  acres  6,511,000  short  tons 

1916 665,000      "  6,228,000      "       " 

1917 675,000      "  6,237,000      " 

1918 690,000      "  6,360,000      "       " 

According  to  the  same  source,  the  production  of  cane  sugar  in 
Cuba  rose  from  3,369,000  short  tons  in  1915  to  3,387,000  tons 
in  1916  and  to  3,584,000  tons  in  1917  (1918  figures  were  not 
available).  In  the  United  States  the  acreage  and  the  produc- 
tion of  cane  sugar  increased  as  follows :  ^ 

Acreage  Production  of  Sugar 

1915 183,000  139,000  short  tons 

1916 221,000  311,000       "         " 

(An  obvious  mistake;  the  yield  per 

1917 244,000  acre  is  given  as  i  short  ton) 

246,000  short  tons 

»  Monthly  Crop  Reports,  July,  1918,  p.  70. 

*  Reference  Handbook  of  Food  Slatislics  in  Relation  to  the  War,  p.  41. 
3  Ibid.,  pp.  38-39. 
17 


248  PRICES    AND    PRICE   CONTROL    DURING   THE    WAR 

That  the  production  of  raw  sugar  in  those  areas  upon  which 
the  United  States  and  the  Allies  had  to  rely  for  their  supply 
has  not  kept  pace  with  the  increased  demand  is  seen  from  the 
following  statement  of  the  Food  Administration.' 

Crop  of  Crop  of 

1916-1917  1917-1918 

Cuba,  amount  available  for  export 3,265,696  3,571,000 

Hawaii,  amount  available  for  export 636,000  553,ooo 

Porto  Rico,  amount  available  for  export 478,511  410,000 

United  States  cane 303,900  243,600 

United  States  beet 820,657  765,207 

Total 5.504.764  5-542,807 

'  Official  Statement  of  the  U.  S.  Food  Administration,  September  12,  1918,  p.  9. 


CHAPTER   VI 
Meat  and  Dairy  Products 

Meat  Products 

One  of  the  effects  of  the  war  was  a  reduction  in  the  number 
of  meat  producing  animals  in  different  parts  of  the  world.  A 
survey  of  the  situation  in  191 7  showed  the  following  results:^ 

Decrease  Decrease  in  other 

Live  Stock  Western  Countries,  Includ-       Total  Net 

Allies  ing  Enemies  Decrease 

Cattle 8,420,000  26,750,000  28,080,000 

Sheep 17,500,000  34,000,000  54,500,000 

Hogs 7,100,000  31,600,000  32,425,000 

Total 33,020,000  92,350,000  1 15,005,000 

The  decrease  in  the  world's  herds  was  due  to  a  great  demand 
for  meats  combined  with  difficulties  of  importing  fodder  and 
to  diversion  of  some  grains  to  uses  directly  as  food  for  man 
instead  of  as  fodder.^ 

Europeans  have  always  relied  to  some  extent  upon  the 
United  States  for  pork  products;  the  war  brought  about  a 
situation  among  the  Allies  which  called  for  an  ever  increasing 
demand  for  overseas  meat  supplies  of  every  kind.  American 
exports  rose  from  493,848,000  pounds,  the  three  year  prewar 
average,  to  1,339,193,000  pounds  in  1915-16,  2, 166,500 pounds 
in  1916-17  and  to  3,011,000,000  pounds  during  the  fiscal  year 
ending  June  30,  1918.^ 

Hogs 

The  number  of  hogs  in  the  United  States,  which  dropped 
from  65,620,000  in  191 1  to  58,933,000  in  1914,  began  to  rise 
again  after  the  outbreak  of  the  war;  the  number  increased  to 
64,618,000  in  1915.     However,  by  the  end  of  1917,  conditions 

1  Herbert  Hoover:  "Grain  and  Live  Stock,"  U.  S.  Food  Administration  Bulle- 
tin No.  10,  p.  10. 

^G.  B.  Roorbach:  "The  World's  Food  Supply,"  Annals  of  the  American 
Academy  of  Political  and  Social  Science,  November,  191 7,  p.  27. 

3  Official  Statement  of  the  U.  S.  Food  Administration,  August  22,  1918,  p.  I. 

249 


250  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

in  the  hog  industry  were  far  from  satisfactory;  the  amount  of 
hogs  declined  to  about  60,000,000  head.  One  of  the  most 
disquieting  symptoms  was  the  ruthless  slaughtering  of  ani- 
mals in  1916-17.^ 

Three-year  Fiscal 

prewar  year 

average  19 16-17 

Hog  population  Jan.  i 61,600,000  67,450,000 

Number  of  hogs  slaughtered 53,204,000  64,798,000 

Per  cent  of  hogs  slaughtered 86.3  96.1 

Average  live  weight  in  pounds 219.21  211 .26 

Exports  of  pork  products  in  pounds 992,885,000  1,501,271,000 

Domestic  consumption  in  terms  of  pounds  of  pork 

products  per  capita 72 .  08  75-77 

The  table  shows  that  whereas  the  three  year  prewar  aver- 
age of  slaughtered  hogs  was  86.3  per  cent  the  percentage  rose 
to  96.1  for  the  fiscal  year  1916-17;  the  average  weight  of  the 
slaughtered  animal  had  fallen  at  the  same  time  from  219  to 
211  pounds. 

There  was  a  great  deal  of  dissatisfaction  among  hog  pro- 
ducers due  to  the  fact  that  the  price  of  feed,  particularly  of 
corn,  had  been  rising  more  rapidly  than  the  price  of  hogs; 
notwithstanding  an  increased  demand  for  hog  products  the 
producers  received  in  some  instances  less  for  the  hogs  than  the 
price  of  the  feed  used  in  the  production  of  the  animals.  The 
highest  price  for  hogs  in  the  Chicago  market  in  19 14  was 
$10.20  per  100  pounds.  The  price  did  not  begin  to  advance 
until  1916,  when  it  rose  to  $11.60,  the  most  pronounced  rise 
occurring  after  the  United  States  entered  the  war.  On  August 
21,  1 91 7,  hogs  were  quoted  in  Chicago  at  $20.00  per  hundred 
pounds. 

It  was  evident  to  the  Food  Administration  that  the  pro- 
duction of  hogs  was  not  keeping  pace  with  home  consumption 
and  with  the  exportation  of  hog  products.  Accordingly,  on 
November  8,  1917,  Mr.  J.  P.  Cotton,  chief  of  the  Food 
Administration  Meat  Division,  issued  a  statement  in  which 
he  outlined  the  future  policy  of  the  Administration  relative  to 
the  prices  of  hogs.  He  pointed  out  the  necessity  of  stabilizing 
the  price,  so  that  the  farmer  should  know  where  he  stands  and 

U.  S.  Food  Administration,  Bulletin  No.  10,  p.  12. 


THE    UNITED    STATES  25 1 

should  be  justified  in  increasing  hogs  for  next  winter.  The 
statement  contained  a  promise  that  t}ie  prices  so  far  as  the 
Food  Administration  could  affect  them  would  not  go  below  a 
minimum  of  $15.50  per  hundredweight  on  the  Chicago  mar- 
ket. The  difference  between  the  minimum  price  for  hogs 
which  became  effective  on  November  10,  191 7,'  and  the  mini- 
mum price  for  wheat  was  that  in  the  latter  case  the  minimum 
was  guaranteed  and  the  guarantee  was  backed  by  the  pur- 
chasing activity  of  the  Grain  Corporation,  while  in  the  case 
of  hogs  the  minimum  merely  expressed  the  intention  on  the 
part  of  the  government  to  use  its  influence  in  keeping  up  the 
price. 

Four  days  after  the  fixing  of  the  minimum  the  special  com- 
mission appointed  by  the  Food  Administration  to  determine 
the  cost  of  hog  production  in  bushels  of  corn  made  public 
the  results  of  its  investigation.  It  found  that  for  ten  years 
ending  with  191 6  hog  production  had  been  maintained  on 
a  ratio  of  1 1.67  bushels  of  corn  to  one  hundred  pounds  of  hog. 
The  commission  doubted  that  such  a  ratio  yielded  any  profit 
to  hog  raisers  and  it  indicated  that  in  order  to  bring  swine 
production  back  to  normal  an  equivalent  valueof  13.3  bushels 
of  corn  per  one  hundred  pounds  of  hog  was  necessary.  As  an 
emergency  measure  it  recommended  a  minimum  price  of 
$16.00  per  hundredweight,  the  price  to  vary  subsequently  in 
accordance  with  the  variation  of  the  price  of  corn.  Acting 
upon  the  recommendation  of  the  commission,  the  Food 
Administration  announced  that  it  would  attempt  to  secure 
for  the  farmer  a  price  for  every  100  pounds  of  hogs  equal  to 
the  average  price  of  13  bushels  of  corn  as  it  prevailed  during 
the  hog  raising  period.  This  ratio  has  never  received  a  real 
trial  and  it  is  difficult  to  tell  what  would  have  been  the  results 
of  its  application  on  the  production  and  on  the  price  of  both 
corn  and  hogs. 

The  packers'  views  on  this  matter  were  expressed  in  a 
letter  to  the  Food  Administration  sent  in  October,  1918, 
which  reads  in  part  as  follows:^ 

'  Commercial  and  Financial  Chronicle,  November  10,  1917,  p.  1850. 

*  Official  Statement  of  the  U.  S.  Food  Administration,  November  i,  1918,  p.  7. 


252  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

The  13  to  I  "basis  fixes  what  might  prove  an  unduly  high 
price  on  hogs  at  the  starting  of  the  packing  season  and  provides 
for  a  gradual  reduction  in  prices,  and  a  normal  descending 
corn  market  would  result  in  the  lowest  prices  probably  being 
arri\ed  at  in  the  spring  of  the  year,  whereas  the  ordinary  course 
of  the  market  is  the  reverse.  This  plan  may  result  in  the 
warehouses  being  filled  up  with  high  priced  products  even 
though  the  Allied  orders,  are  very  considerably  increased,  as 
the  Allied  requirements  only  take  certain  cuts  produced  from 
certain  weight  choice  hogs,  and  the  Allied  orders  do  not  pro- 
vide an  outlet  for  the  cuts  of  all  kinds  of  hogs." 

The  minimum  price  for  hogs  was  fixed  in  October  at  $17.50 
per  hundredweight.  This  was  done  "in  execution  of  the  de- 
clared policy  of  the  Food  Administration  to  use  every  agency 
under  its  control  to  secure  justice  to  the  farmer."^ 

One  of  the  reasons  why  so  much  attention  has  been  given  to 
hog  products  lies  in  the  fact  that  increased  production  in  pork 
fats  may  be  accomplished  much  more  rapidly  than  increased 
production  of  either  dairy  or  vegetable  fats;^  there  was  an 
urgent  need  for  fats  on  the  western  battle  front.  As  Mr. 
Hoover  has  put  it  tersely,  "if  we  discontinue  exports  (of  fats), 
we  will  move  the  German  line  from  France  to  the  Atlantic 
seaboard."  To  meet  the  increased  demand  both  at  home  and 
abroad  the  stimulation  of  the  production  of  fats  was  deemed 
by  the  Food  Administration  an  absolute  necessity;  it  concen- 
trated its  attention  on  hogs  because  no  fat  producing  crop 
responds  more  quickly  than  does  the  hog  crop.^ 

Cattle 

There  has  been  a  steady  decline  in  the  number  of  cattle  in 
this  country,  the  amount  having  dropped  from  56,592,000 
head  in  1907  to  40,850,000  at  the  beginning  of  1917.''    In  1914 

'  Official  Statement  of  the  U.  S.  Food  Administration,  November  i,  1918,  p.  7. 

^  Food  Administration,  Bulletin  No.  10,  p.  10. 

^  Ibid.,  No.  9,  p.  7. 

*  Food  Administration,  Bulletin  No.  9,  p.  7.  These  figures  apparently  do  not 
include  milk  cows.  The  Reference  Handbook  of  Food  Statistics  in  Relation  to  the 
War  (Statistical  Division,  Food  Administration)  places  the  number  of  cattle  on 
January  i,  1918,  at  66,830,000. 


THE    UNITED    STATES  253 

the  United  States  had  20,739,000  dairy  cows  and  35,855,000 
other  cattle,  or  56.5  heads  per  100  of  population  as  compared 
with  90.6  per  100  of  population  in  1^90, 

There  is  no  dominant  feed  for  cattle  as  there  is  for  swine, 
therefore  no  attempt  could  be  made  to  stimulate  production 
by  establishing  a  ratio  between  beef  and  feed,  as  has  been 
done  in  the  case  of  hogs.  One  of  the  important  measures 
which  had  been  taken  in  order  to  help  the  cattle  raising  indus- 
try was  the  licensing  of  all  manufacturers  of  and  dealers  in 
bran,  coarse  grains  and  various  kinds  of  commercial  feeds. 
Hoarding  and  speculation  were  thus  brought  under  control. 
A  concrete  illustration  of  how  the  Food  Administration  dealt 
at  the  end  of  191 7  with  the  Texas  situation  will  show  plainly 
the  methods  used  and  the  accomplished  results.  With  the 
price  of  cottonseed  cake  up  to  seventy  dollars  a  ton  from  a 
normal  figure  of  forty-five  dollars  a  ton,  many  cattle  raisers 
had  not  thought  it  worth  while  to  save  the  cattle,  which 
owing  to  the  drought  during  the  month  of  October  and 
November,  191 7,  began  to  starve  on  their  ranges.  Mr.  Hoover 
brought  together  the  cattle  men  and  the  cottonseed  people. 
After  some  bitter  debate  a  price  of  $50  for  cottonseed  cake 
was  fixed.  The  fixing  of  an  equitable  price  did  not,  however, 
end  the  trouble,  as  most  of  the  crop  was  under  contract 
to  be  shipped  to  the  dairy  cattle  men  in  the  north.  To  insure 
a  sufficient  supply  for  the  Texas  cattle,  the  Food  Adminis- 
tration requested  the  Railroad  \A'ar  Board  to  put  an  embargo 
on  the  export  out  of  Texas  of  cottonseed  cakes,  the  feeders 
and  dairymen  outside  of  the  drought  stricken  district  of  the 
Southwest  being  directed  to  secure  their  cottonseed  cake  and 
meal  from  Arkansas,  Louisiana  and  points  east  of  the  Missis- 
sippi River.''  All  the  cottonseed  which  was  to  have  gone  to 
neutral  countries  was  seized  by  the  Food  Administration,  the 
War  Trade  Board  having  been  asked  to  prohibit  the  export 
of  cottonseed  except  by  license. 

In  the  corn  belt  the  situation  was  aggravated  by  the  inade- 

1  D.  Lawrence:  "As  Mr.  Hoover  sees  it,"  The  Country  Gentleman,  December 
29,  1917,  p.  29. 


254  PRICES   AND    PRICE    CONTROL   DURING    THE    WAR 

qiiacy  of  transportation  facilities.  In  February,  191 8,  Mr. 
A.  Sykes,  president  of  the  Corn  Belt  Meat  Producers'  Asso- 
ciation, called  the  attention  of  the  Senate  Agricultural  Com- 
mittee to  the  fact  that  for  weeks  the  meat  producers  were 
compelled  to  keep  their  fattened  cattle  and  hogs,  feeding 
them  continually,  while  the  prices  of  foodstuffs  soared  and  the 
reserve  seed  stock  diminished.  According  to  him,  75  per  cent 
of  live  stock  in  the  corn  belt  of  the  middle  west  was  unmarket- 
able at  the  time  because  there  were  no  cars  to  move  it.  Mr. 
Sykes  accused  the  Food  Administration  of  having  been  too 
slow  and  expressed  dissatisfaction  at  not  having  practical 
live  stock  men  or  farmers  in  the  organization.  Prompt  re- 
medial action  was  urged  by  him  as  well  as  by  others  w^ho 
appeared  before  the  Agricultural  Committee. 

In  August,  1918,  meat  dealers,  hotels,  public  institutions 
and  housewives  were  urged  by  the  Food  Administration  to  buy 
light  weight  cattle  which  were  coming  on  the  market  from  the 
drought  affected  regions  of  Texas  and  Oklahoma.  The  heavier 
grades  were  needed  for  the  army  and  navy  and  for  the  Allied 
army,  and  the  purchase  of  lighter  beef  by  domestic  consumers 
was  advocated  so  as  to  maintain  a  reasonable  average  price 
for  light  weight  cattle  and  at  the  same  time  secure  for  domes- 
tic use  supplies  of  meat  at  prices  very  much  cheaper  than  that 
demanded  for  heavy  beef.^ 

Control  of  the  Meat  Packing  Industry 
While  conferring  with  the  meat  packers  in  Chicago  during 
the  latter  part  of  August,  191 7,  Mr.  Hoover  assured  them  he 
had  no  intention  of  fixing  the  price  of  beef  and  pork  products, 
as  had  been  unofficially  announced,  but  that  he  hoped  "to 
develop  by  discussion  with  representative  committees  of  the 
hog  producers,  the  cattle  producers,  the  commission  men  and 
the  packers  greater  stabilization  of  the  industry  during  the 
war,  and  in  such  a  way  as  to  encourage  production,  to  elimi- 
nate speculative  profits  and  risk,  so  far  as  may  be,  and  by  so 
doing  to  protect  the  consumer.  "^ 

'  Official  Statement  of  the  U.  S.  Food  Administration,  September  12,  1918,  p.  13. 
2  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  November,  1917,  p.  83. 


THE    UNITED    STATES  255 

The  packers'  committee  on  September  12  expressed  the 
approval  of  the  government  plan  to  place  the  packing  indus- 
try under  license;  and  it  assured  the  Food  Administration  of 
its  desire  to  cooperate  in  working  out  the  problems  arising 
out  of  the  war. 

On  December  8,  191 7,  the  rules  and  regulations  for  controll- 
ing of  slaughtering  and  meat  packing  industries  were  made 
known.  Every  detail  of  the  meat  business  was  put  under 
government  supervision.     Maximum  profit  was  fixed  at ' 

9  per  cent  on  investment    "l  for  packers  doing   an   annual   business   exceeding 
15  per  cent  on  investment    J  $100,000,000 

2^%  on  gross  value  of  sales  for  smaller  packers. 

The  "meat  business"  was  defined  as  including  all  foods  o^ 
animal  origin,  fresh  or  prepared,  also  operation  of  cars  and 
marketing  branches  and  all  immediate  by-products  of  live 
stock  such  as  hides,  wool,  fat,  bones,  ofi^al  and  tankage,  but 
not  the  manufactured  specialty  products.  Elaborate  regu- 
lations and  accounting  were  provided  to  make  sure  that  the 
meat  profit  was  not  diverted  or  concealed  in  the  specialty 
business,  the  main  purpose  of  these  regulations  being  the 
protection  of  small  packers  against  their  powerful  competi- 
tors.^  To  control  the  packers,  a  Meat  Division  was  estab- 
lished, under  Joseph  P.  Cotton,  with  headquarters  at  Chicago. 

The  limiting  of  profit  on  investment  was  protested  by  five 
of  Chicago's  largest  packers,  Armour  &  Co.,  Cudahy  &  Co., 
Morris  &  Co.,  Swift  &  Co.  and  Wilson  &  Co.,  who  contended 
that  it  would  affect  adversely  their  borrowing  capacity  and 
would  prevent  the  necessary  plant  expansion.^  Mr.  Hoover 
in  his  reply  stated  that  investigations  showed  that  prewar 
earnings  of  the  companies  were  less  than  9  per  cent,  and 
that  the  packers'  request  for  increase  was  tantamount  to  their 
asking  that  consumers  pay  for  plant  expansion. 

The  Federal  Trade  Commission,  which  conducted  an  ex- 
haustive investigation  into  the  slaughtering  and  meat  pack- 
ing business,  came  to  the   conclusion  that  the  big  packers 

1  Commercial  and  Finaticial  Chronicle,  March  2,  1918,  p.  877. 

2  G.  Soule:  "The  Control  of  Meat,"  The  New  Republic,  P^ebruary  2,  1918,  p.  14. 
^  Commercial  and  Financial  Chronicle,  December  15,  1917,  p.  2325. 


256  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

dominated  prices  both  of  the  live  stock  and  of  the  meat  prod- 
ucts. It  charged  them  with  illegal  profiteering.  The  packers 
pointed  out  that  their  profits  were  only  a  fraction  of  a  cent 
on  a  pound  of  meat  and  that  therefore  they  could  not  be  held 
responsible  for  high  meat  prices.  ^ 

Dairy  Products 

,  Milk 

•The  price  of  milk  began  to  go  up  in  various  large  cities  of 
the  country  in  the  autumn  of  191 6.  One  advance  after 
another  took  place  until  in  October,  191 7,  milk  was  selling  in 
New  York  at  14  cents  a  quart  retail,-  as  compared  with  9 
cents  in  September,  191 6.  During  the  same  period  the  price 
went  up  in  Chicago  from  8  cents  to  13  cents  a  quart. 

In  an  attempt  to  solve  the  problem  of  milk  prices,  the  Food 
Administration  set  up  regional  commissions  on  which  pro- 
ducers, consumers,  distributors  and  milk  experts  were  repre- 
sented. Leading  citizens  of  each  community  were  selected 
to  serve  on  these  federal  boards,  and  public  hearings  at  which 
all  interested  parties  were  given  an  opportunity  to  present 
facts  bearing  on  prices  were  held  at  various  places  throughout 
the  country.' 

No  uniform  national  price  could  be  established,  because  of 
great  variations  in  the  costs  of  production  and  distribution 
territorially. 

The  situation  in  Chicago  may  be  considered  as  represen- 
tative of  the  whole  movement  dealing  with  milk  prices.  A 
study  of  this  situation  gives  an  insight  into  what  were  the 
conditions  in  the  production  and  distribution  of  milk  which 
led  to  the  rapid  advance  in  the  price  of  this  essential  and  in- 
dispensable food  product.  The  dominant  factors  in  Chicago 
were  the  rise  of  the  large  dealer  or  distributor  and  the  estab- 
lishment of  the  Milk  Producers'  Association  (an  organization 

1  E.  Wildman:  "Our  Daily  Meat,"  The  Forum,  November,  1910,  p.  587. 
*  The  Literary  Digest,  October  20,  1917,  p.  12. 

2  D.  Lawrence:  "As  Mr.  Hoover  sees  it,"  The  Country  Gentleman,  December 
29.  1917,  p.  29. 


THE    UNITED    STATES  257 

of  over  16,000  dairymen)  in  order  to  cope  with  the  concen- 
trated control  of  distribution.^ 

In  1893  there  were  2,700  distributors  of  milk  in  Chicago; 
the  number  declined  in  1906  to  1300  and  in  1917,  to  688,  two 
of  which  controlled  about  40  per  cent  of  the  city's  milk  busi- 
ness. The  basic  standard  price  which  the  dealers  paid  just 
before  the  Milk  Producers'  Association  made  its  full  strength 
felt,  in  the  spring  of  1917,  was  $1.55  per  hundred  pounds.  In 
April,  191 7,  the  dealers  had  to  submit  to  the  farmers'  demands 
for  increase  in  price,  which  was  raised  from  $1.55  to  $2.12 
per  hundred  pounds  for  the  summer  months  (May  to  Septem- 
ber) ;2  the  consumers'  price  was  advanced  at  the  same  time  to 
10  cents  a  quart.  When  it  came  to  the  fixing  of  the  price  for 
the  winter  milk,  to  begin  on  October  i,  1917,  the  producers 
made  a  demand  for  $3.42  per  hundred  pounds,  claiming  that 
only  at  such  a  price  would  they  be  able  to  produce  milk  during 
the  feeding  season.  The  distributors  protested,  but  had  to 
submit  to  the  demands  of  the  producers.  The  price  of  $3.42 
was  fixed  at  the  urgent  appeal  of  the  Food  Administration  to 
the  farmer  for  the  month  of  October  only,  the  Administration 
having  promised  that  it  would  attempt  to  regulate  the  price 
of  dairy  feeds.  The  retail  price  of  milk  went  up  to  13  cents  a 
quart,  which  caused  a  great  deal  of  agitation  in  the  public 
press  and  among  the  consumers.  When  in  the  end  of  October 
the  time  came  for  the  renewal  of  the  contract  between  pro- 
ducers and  dealers,  the  latter  refused  to  sign  unless  the  price 
was  reduced.  The  Milk  Producers'  Association  threatened  to 
stop  the  shipment  of  milk  to  Chicago.  The  State  Food  Admin- 
istrator interfered  at  this  juncture,  appointing  an  arbitration 
commission,  whose  duty  it  was  after  an  investigation  to  name 
a  price  for  milk  to  be  paid  to  producers,  which  price  "would 
cover  the  cost  of  production  and  a  reasonable  profit  thereon," 
also  the  retail  price  to  be  paid  to  distributors,  based  upon 
"the  cost  of  distribution  and  a  reasonable  profit  to  the  dis- 

1  C.  S.  Duncan:  "The  Chicago  Milk  Inquiry,"  Journal  of  Political  Economy, 
April,  1918,  pp.  322-323. 
'^Ibid.,  p.  324. 


258  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

tributor."'  It  was  agreed  that  pending  the  investigation  the 
producers  would  accept  $3.22  per  hundred  pounds  and  the 
distributors  would  retail  the  milk  at  12  cents  a  quart. 

A  mass  of  data  was  presented  to  the  commission  by  dairy- 
men, bankers,  dairy  experts,  distributors  of  milk  and  members 
of  the  dairy  departments  of  agricultural  colleges.  In  arriving 
at  its  decision,  the  commission  assumed  that  in  each  hundred 
pounds  of  milk  produced  there  enter  19  per  cent  home  grown 
grains,  19  per  cent  mill  feeds,  35  per  cent  hay,  27  per  cent 
labor.  Acting  on  this  assumption,  and  having  taken  into 
consideration  the  increased  price  of  feeds  and  labor,  the  com- 
mission, on  February  2,  declared  that  the  following  prices 
should  be  paid  to  the  dairymen:  February,  $3.07;  March, 
$2.83;  April,  $2.49;  May,  $2.04;  June,  $1.80. 

The  price  to  consumers  was  left  at  12  cents  a  quart.  Six 
out  of  nine  commissioners  concurred  in  the  decision,  which 
was  immediately  declared  by  the  producers  to  be  not  accept- 
able to  them.  Two  representatives  of  the  federal  Food 
Administration  were  called  in  to  review  the  findings  of  the 
commission.  In  the  meantime,  one  of  the  commissioners, 
Dean  Davenport  of  the  College  of  Agriculture  of  the  Univer- 
sity of  Illinois,  seceded  from  the  commission  and  in  an  open 
letter  to  the  State  Food  Administrator  expressed  his  disap- 
proval of  its  findings.  The  commission  which  met  on  Febru- 
ary 21  for  review  reaffirmed  the  conclusions  of  the  first  deci- 
sion and  for  the  month  of  February  the  price  to  producers  as 
set  by  the  commission  remained  in  force. 

Upon  arrival  of  the  two  representatives  from  Washington, 
efforts  were  made  to  reach  a  satisfactory  adjustment.  On 
March  i  an  agreement  was  concluded  with  the  producers  by 
means  of  which  they  were  to  receive  the  price  of  $3.10  per 
hundred  pounds  for  the  month  instead  of  $2.83,  as  determined 
by  the  first  findings  of  the  commission.  The  dealers  consented 
to  pay  this  higher  price  without  raising  the  price  to  the 
consumer.      Prices   for   the   succeeding   months   were   to   be 

1  C.  S.  Duncan:  "The  Chicago  Milk  Inquiry,"  Journal  of  Political  Economy, 
April,  1918,  p.  326. 


THE    UNITED    STATES  259 

determined  on  the  basis  of  the  prices  pubHshed  by  the  De- 
partment of  Agriculture.'  ; 

Butter 

The  average  price  of  creamery  butter  for  1913  was  29.69 
cents  per  pound,  in  Chicago;  in  July,  1914,  it  was  25.56  cents, 
about  the  same  as  in  July  of  the  previous  year,  the  price  of 
butter  being  usually  somewhat  lower  during  the  summer 
months.  There  was  no  advance  in  the  price  during  191 5  and 
the  average  for  the  year  was  lower  than  for  1914,  namely, 
27.43  cents  a  pound.  The  rise  began  in  the  autumn  of  1916, 
and  by  December  of  that  year  butter  was  quoted  in  the 
Chicago  market  at  37.31  cents  a  pound;  it  has  never  gone 
much  below  this  figure  since,  the  lowest  quotation  being  36.81 
cents  in  January,  1917,  and  37  cents  in  July,  1917.  In  Decem- 
ber, 1917,  butter  sold  at  46.75  cents,  and  the  average  price 
for  the  year  was  40.34  cents;  the  continued  advance  through 
1918  brought  the  price  up  to  55.25  cents  a  pound  in  October.^ 

Until  the  early  part  of  191 8  the  Food  Administration  made 
no  attempt  to  establish  maximums  or  to  fix  any  definite  prices 
for  butter,  its  control  having  been  confined  to  the  elimination 
of  speculation.  With  this  aim  in  view,  it  promulgated  a  set 
of  rules  governing  transactions  on  the  butter  exchanges 
during  the  war  (November  15,  1917).^ 

On  January  19,  191 8,  the  Food  Administration  announced 
the  following  wholesale  prices  for  storage  creamery  butter:* 

1.  New  York  and  other  points  in  seaboard  territory:  47 
cents  a  pound  "for  the  remainder  of  the  season"  (about  two 
months). 

2.  Chicago:  45^  cents  a  pound  till  February  i,  when  the 
price  was  to  be  advanced  one-fourth  of  a  cent  on  the  ist  and 
15th  of  each  month  until  all  creamery  butter  was  released  from 
storage. 

These  prices  were  established  with  the  voluntary  coopera- 
tion of  the  butter  trade. 

'  C.  S.  Duncan:  "The  Chicago  Milk  Inquiry-,"  Journal  of  Political  Economy, 
April,  1918,  pp.  341-344-  .     „,       ,, 

2  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918,  p.  39. 

'  Commercial  and  Financial  Chronicle,  March  2,  1918,  p.  877. 

'^  Ibid.,  February  2,  1918,  p.  446. 


260  TRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

Comprehensive  regulations  governing  margins  which  dealers 
in  butter  could  add  to  the  cost  price  were  promulgated  in 
June,  1918.  According  to  these  regulations,  licensees  dealing 
in  cold  storage  butter  were  requested  to  sell  it  at  a  price  based 
on  actual  cost,  not  on  replacement  cost,  the  actual  cost  in- 
cluding purchase  price,  transportation  charges,  storage  and 
insurance  charges,  interest  during  storage  period  and  cost  of 
printing.  Costs  were  not  to,  include  allowances  for  shrinkage 
in  weight,  commissions  or  other  expenses  not  listed  above. 

Maximum  margins  which  dealers  were  allowed  to  add  to 
cost  price  were  on : 

Carloads i  cent  per  pound 

Lots  between  7,000  pounds  and  a  car  load i\  cents  per  pound 

700  to  7,000  pounds if  cents  per  pound 

Less  than  700  pounds 2f  cents  per  pound 

These  margins  for  sales  of  amounts  less  than  7,000  pounds 
were  changed  on  July  19  to  2  cents  per  pound  for  3,500  to  7,000 
pounds,  2^  cents  per  pound  for  700  to  3,500  pounds,  3  cents  per 
pound  for  less  than  700  pounds,  but  amounting  to  100  pounds 
or  more,  and  3f  cents  per  pound  on  sales  of  less  than  100 
pounds.^  Commissions  were  limited  to  three  quarters  of  a 
cent  per  pound.  Attention  of  the  licensees  was  called  to  the 
provision  that  "the  licensee  in  selling  food  commodities  shall 
keep  such  commodities  moving  to  the  consumer  in  as  direct  a 
line  as  practicable  and  without  unreasonable  delay."  Resales 
within  the  same  trade  without  reasonable  justification,  es- 
pecially if  tending  to  result  in  a  higher  market  price  to  the 
retailer  or  consumer,  were  dealt  with  as  an  unfair  practice. 

Cheese 
Governmental  control  of  cheese  prices  did  not  begin  until 
June,  1918,  when  the  Food  Administration  issued  regulations 
governing  manufacturers,  dealers,  brokers  and  commission 
merchants  making  or  handling  cheese.  These  regulations 
were  the  result  of  conferences  between  the  representatives  of 
the  cheese  trade  and  the  officials  of  the  Food  Administration. 
No  limitation  was  placed  on  the  price  to  be  received  by  the 
farmer.     Commissions  on  the  sales  of  American  or  Cheddar 

1  Monthly  Labor  Review,  September,  1918,  p.  599. 


THE    UNITED    STATES  261 

cheese  were  limited  to  |  cent  per  pound,  and  the  following 
margins  of  advance  were  established  for  intermediate  mer- 
chants between  the  manufacturers  and  the  retailers: 

On  car  lot  sales f  cents  per  pound 

Less  than  car  lot,  but  not  less  than  7,000  pounds ij  cents  per  pound 

500  to  7,000  pounds il  cents  per  pound 

Less  than  500  pounds 3  cents  per  pound 

On  cheese  stored  more  than  30  days  a  maximum  of  |  cent  per 
pound  could  be  added  each  month,  total  not  to  exceed  i  cent.' 

In  July  the  margins  were  modified  on  lots  smaller  than  7,000 
pounds,  being  "made  wide  enough  to  provide  for  exceptional 
cases  where  the  cost  of  doing  business  was  high."^  The  mar- 
gins were:  if  cents  on  4,000  to  7,000  pound  sales;  2§  cents 
on  sales  of  1,000  to  4,000  pounds;  3  cents  on  sales  between 
100  and  1,000  pounds;  and  3^  cents  on  sales  less  than  100 
pounds.  These  were  maximum  margins  and  a  dealer  was  not 
allowed  to  charge  the  limits  if  by  doing  so  he  made  an  ex- 
cessive profit. 

New  regulations,  this  time  covering  all  important  kinds  of 
cheese,  including  such  foreign  types  as  Swiss,  brick,  limburger 
and  Munster  were  issued  in  August;  they  supplanted  all  the 
former  rules.  The  selling  price  of  cheese  had  to  be  based  on 
actual  cost  plus  reasonable  profit  without  regard  to  market 
or  replacement  value. ^  Cost  for  the  purpose  of  this  rule  in- 
cluded (i)  purchase  price,  (2)  transportation  charges,  if  any, 
(3)  storage  charges  actually  incurred,  (4)  insurance  charges, 
(5)  interest  on  money  invested  at  the  current  rate,  (6)  actual* 
cost  of  paraffining,  if  any,  not  to  exceed  one-fourth  cent  per 
pound. 

Under  the  above  ruling,  the  Retail  Section  of  the  Distribu- 
tion of  Perishables  of  the  United  States  Food  Administration 
investigated  the  cost  of  handling  cheese  at  retail  and  deter- 
mined that  in  selling  American  or  Cheddar  cheese  any  advance 
in  excess  of  6  or  7  cents  per  pound  over  cost  was  unreasonable.* 

Kinds  of  cheese  not  mentioned  in  the  rules  came  under 
general  rules  in  respect  to  excess  profits. 

1  Commercial  and  Financial  Chronicle,  June  22,  1918,  p.  261 1. 

*  Monthly  Labor  Review,  September,  1918,  p.  124. 

*  Commercial  and  Financial  Chronicle,  August  10,  1918,  p.  559. 

^Official  Statement  of  the  U.  S.  Food  Administration,  October  i,  1918,  p.  17. 


CHAPTER   VII 
Fuel 

Coal 

During  the  first  two  years  of  the  war  the  coal  situation  in 
the  United  States  was  not  materially  different  from  what  it 
had  been  before  the  outbreak  of  hostilities  in  Europe.  Keep- 
ing pace  with  a  growing  demand,  production  rose  from  513,- 
522,477  tons  in  1914,  to  531,619,487  tons  in  1915  and  to  590,- 
098,175  tons  in  1916.  Due  to  war  activities  and  to  traffic 
congestion,  a  local  shortage  of  coal  occurred  in  some  parts 
of  the  country  during  the  autumn  and  winter  months  of 
1 91 6-1 7.  This  shortage  caused  hardships  to  many  house- 
holders and  difficulties  in  industrial  plants.  A  panic  developed 
with  its  concomitant  rush  on  the  part  of  consumers  to  purchase 
coal  at  any  price.  ^  Bituminous  coal  was  selling  in  the  year 
ending  December  31,  1916,  at  from  $1.25  to  $1.50  per  ton  at 
the  mines.  Prices  began  to  advance  during  the  latter  part  of 
that  year.  They  rose  sharply  in  the  early  months  of  1917, 
reaching  in  the  summer  the  unprecedented  height  of  $7  and 
$8  per  ton.  Public  dissatisfaction,  which  had  been  aroused 
long  before  this  by  price  increases  made  by  anthracite  op- 
erators in  the  beginning  of  1916,2  became  most  pronounced 
and  widespread.  The  government  felt  that  something  had 
to  be  done  in  order  to  bring  prices  under  control. 

In  pursuance  of  the  Hitchcock  resolution  introduced  in  the 
Senate  on  June  22,  191 6,  an  investigation  into  the  produc- 
tion, distribution  and  cost  of  anthracite  coal  had  been  carried 
on  by  the  Federal  Trade  Commission  during  the  fall  and 
winter  of  1916-17.^     The  commission  in  the  course  of  this 

»  Methods  of  Fixing  Prices  of  Bituminous  Coal  Adopted  by  U.  S.  Fuel  Admin- 
istration, Publication  No.  29,  September  20,  1918,  p.  141 1. 

2  \V.  Notz:  "The  World's  Coal  Situation  during  the  War,"  Journal  of  Political 
Economy,  July,  1918,  p.  674. 

^Ibid. 

262 


THE    UNITED    STATES  263 

Inquiry  soon  discovered  that  an  independent  investigation 
of  the  anthracite  coal  situation  was  not  feasible,  as  a  close 
connection  exists  between  the  use  of  anthracite  and  of  bitu- 
minous coal,  one  kind  of  coal  being  substituted  for  another 
with  increased  demand  and  rising  prices. 

The  report  of  the  Federal  Trade  Commission  was  sub- 
mitted to  Congress  on  June  20,  191 7.  According  to  this  re- 
port, the  large  railroad  companies  had  only  slightly  increased 
their  basic  prices  at  the  mines;  a  much  greater  advantage  of 
the  market  situation  was  taken  by  a  number  of  independent 
operators  who  raised  their  prices  from  $1.00  to  $5.00  a  ton. 
Blame  was  also  placed  upon  the  jobbers,  the  majority  of 
w^hom  averaged  double  or  treble  their  normal  gross  profits. 
Conditions  in  the  retail  coal  market  were  found  to  differ 
materially  in  various  parts  of  the  country.  Thus  while  the 
coal  dealers  in  Minneapolis,  St.  Paul,  Milwaukee  and  Buf- 
falo had  not  taken  undue  advantage  of  the  crisis,  those  in 
Chicago  and  in  Boston  had  increased  their  gross  margins  by 
as  much  as  $1.50  or  $1.75  per  net  ton.' 

The  commission  came  to  the  conclusion  that  those  coal- 
operating  companies  whose  books  had  been  audited  were  not 
justified  in  their  increase  of  prices  by  the  increase  in  cost. 

An  investigation  into  the  conditions  of  the  bituminous  coal 
industry  was  conducted  by  the  Federal  Trade  Commission 
simultaneously  with  its  Investigation  of  the  anthracite  coal 
situation.  On  June  19,  1917,  the  commission  reported  to  the 
House  of  Representatives^  that  In  its  opinion  the  coal  indus- 
try was  suffering  from  inadequacy  of  transportation  facilities, 
which  curtailed  output  and  thus  produced  a  shortage  of  coal. 
The  commission  recommended  in  a  majority  report  (i)  that 
the  production  of  coal  and  coke  be  conducted  through  a  pool 
in  the  hands  of  a  government  agency;  that  the  producers  of 
various  grades  of  fuel  be  paid  their  full  cost  of  production  plus 
a  uniform  profit  per  ton  (with  due  allowance  for  quality  of 

iW.  Notz:    op.  cit.,  p.  675. 

^  Report  of    the  Federal  Trade  Commission  on  Anthracite  and  Bituminous 
Coal,  June  20,  1917,  p.  18. 

18 


264  PRICES   AND   PRICE    CONTROL    DURING   THE    WAR 

product  and  efficiency  of  service),  (2)  that  the  transportation 
agencies  of  the  United  States,  both  rail  and  water,  be  similarly 
pooled  and  operated  on  government  account  under  the  direc- 
tion of  the  President,  and  that  all  such  means  of  transporta- 
tion be  operated  as  a  unit,  the  owning  corporations  being  paid 
a  just  and  fair  compensation  which  would  cover  normal  net 
profit,  upkeep  and  betterments. 

In  the  summer  of  191 7  the  handling  of  the  coal  situation 
was  entrusted  to  a  Committee  for  National  Defense,  headed 
by  Mr.  Peabody,  a  well  known  coal  operator.  This  com- 
mittee soon  after  its  establishment  reached  an  agreement  with 
the  operators,  by  which  the  flat  price  for  bituminous  coal 
was  set  at  $3.00  per  ton  at  the  mines. ^  This  price  was  immedi- 
ately repudiated  by  Secretaries  Baker  and  Daniels  as  being  too 
high. 2  Their  stand  found  an  almost  unanimous  support  in 
the  popular  press,  which  took  the  occasion  to  discredit  at  the 
same  time  all  other  activities  of  the  coal  experts. 

The  summer  months  of  1917  went  by  without  any  definite 
settlement  of  the  price  question.  Because  of  the  uncertainty 
of  these  months,  operators  withheld  from  maximum  produc- 
tion, thus  paving  the  way  for  the  subsequent  shortage  of  coal. 
The  realization  of  the  fact  that  the  coal  situation  was  growing 
in  acuteness  led  to  the  insertion  into  the  Food  Control  Bill, 
while  it  was  being  discussed  in  the  Senate,  of  a  section  giving 
the  President  sweeping  powers  concerning  coal. 

The  act  provided  that  ''the  President  of  the  United  States 
shall  be  empowered,  whenever  and  wherever  in  his  judgment 
necessary  for  the  efficient  prosecution  of  the  war,  to  fix  the 
price  of  coal  and  coke,  wherever  and  whenever  sold,  either  by 
producer  or  dealer,  to  establish  rules  for  the  regulation  of  and 
to  regulate  the  method  of  production,  sale,  shipment,  distribu- 
tion, apportionment  or  storage  thereof  among  dealers  and 
consumers." 

^  Report  of  the  Federal  Trade  Commission  on  Anthracite  and  Bituminous  Coal,. 
June  20,  1917,  pp.  20,  21. 

2  Commercial  and  Financial  Chronicle,  July  7,  1917,  p.  20.  Mr.  Daniels  an- 
nounced that  the  Navy  would  continue  to  buy  at  $2.33  a  ton,  leaving  the  price 
to  be  determined  after  the  Federal  Trade  Commission  had  ascertained  produc- 
tion costs. 


THE   UNITED   STATES  265 

The  President  was  empowered,  In  case  any  producer  or 
dealer  failed  or  neglected  to  conform  to  the  President's  prices 
or  regulations,  to  requisition  the  plant,  business  and  all 
appurtenances  thereof  belonging  to  such  producer  or  dealer. 
He  was  authorized  to  operate  such  plants  through  an  agency 
selected  by  him,  paying  the  owner  a  just  compensation.'  He 
was  also  authorized  if  he  deemed  it  necessary  to  require  coal 
producers  to  sell  their  products  only  to  the  United  States 
through  an  agency  designated  by  him,  "such  agency  to  regu- 
late the  resale  of  coal  and  coke,  the  prices  thereof  as  well  as 
the  methods  of  production,  shipment,  distribution,  appor- 
tionment and  storage." 

The  prices  to  be  paid  were  to  be  based  upon  a  fair  and 
just  profit  over  and  above  the  cost  of  production,  including 
proper  maintenance  and  depreciation  charges.  The  reason- 
ableness of  such  profits  and  cost  of  production  was  to  be  de- 
termined by  the  Federal  Trade  Commission. 

Acting  under  the  authority  of  this  act,  the  President  fixed 
on  August  21,  191 7,  a  schedule  of  provisional  bituminous  coal 
prices,  for  the  sale  of  coal  not  under  contract;  on  August  23 
he  fixed  in  a  similar  way  prices  for  anthracite  coal.  On  the 
same  date  Mr.  Harry  A.  Garfield  was  appointed  United 
States  Fuel  Administrator. 

The  President's  prices  for  bituminous  coal  were  specified 
for  run-of-mine,  prepared  sizes  and  slack  or  screening;  they 
were  fixed  by  States  and  in  a  few  instances  by  districts  and 
by  seams.  These  prices  were  based  on  average  figures  on 
about  100,000,000  tons  production,  prepared  by  the  Federal 
Trade  Commission  "from  the  very  meager  data  in  its  pos- 
session, generally  from  the  larger  and  lower  cost  operators  of 
each  district."^ 

According  to  the  President's  proclamation,  the  provision- 
ally fixed  prices  were  based  upon  the  actual  cost  of  production 
and  were  deemed  to  be  not  only  fair  and  just  but  liberal  as 
well.    They  were  as  follows:' 

^Public  Act,  No.  41,  65th  Congress  (H.  R.  4961), "pp.  9-10. 

^  U.  S.  Fuel  Administration  Publication  No.  2Q,  September  20,  1918,  p.  1412. 

'  Official  Bulletin,  vol.  i,  No.  88,  August  22,  191 7,  p.  i. 


266 


PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 


Prepared  Slack  or 

Run  of  Mine  Sizes  Screenings 

Pennsylvania $2.00  $2.25  $i-75 

Mar>'land 2.00  2.25  1.75 

West  Virginia 2 .00  2 .25  i  .75 

West  Virginia  (New  River) 2.15  2 .40  i  .90 

\'irginia 2.00  2.25  1.75 

Ohio  (thick  vein) 2 .  00  2.25  1.75 

Ohio  (thin  vein) 2 .35  2 .60  2 .  10 

Kentucky 1.95  2.20  1.70 

Kentucky  (Jellico) 2 .40  2 .65  2.15 

Alabama  (big  seam) i  .90  2.15  i  .65 

Alabama  (Pratt,  Jaeger,  and  Corona) .  .  2.15  2.40  1.90 

Alabama  (Cahaba  and  Black  Creek) ...  2 .40  2 .65  2.15 

Tennessee  (eastern) 2 .30  2 .55  2 .05 

Tennessee  (Jellico) 2 .40  2 .65  2.15 

Indiana 1.95  2.20  1.70 

Illinois 1.95  2.20  1.70 

Illinois  (third  vein) 2 .40  2 .65  2.15 

Arkansas 2 .  65  2 .  90  2 .  40 

Iowa 2 .  70  2.95  2.45 

Kansas 2.55  2 .  80  2.30 

Missouri 2 .  70  2 .  95  2 .  45 

Oklahoma : 3  .  05  3  .  30  2  .  80 

Texas 2 .  65  2 .  90  2  .  40 

Colorado 2.45  2 .  70  2.20 

Montana 2  .  70  2  .  95  2  .  45 

New  Mexico 2 .  40  2 .  65  2.15 

Wyoming 2 .  50  2.75  2.25 

Utah 2.60  2.85  2.35 

Washington 325  3-50  3  ■  00 

Note. — Prices  are  on  f.  o.  b.  mine  basis  for  ton  of  2,000  pounds. 


The  order  fixing  anthracite  coal  prices  enumerated  sixteen 
most  important  producers  (the  railroad  companies'  mines)  to 
whom  the  measure  applied ;  others  (the  so-called  independent 
operators'  mines)  were  permitted  to  charge  higher  prices 
provided  they  did  not  exceed  the  scheduled  prices  by  more 
than  75  cents  per  ton.  The  prices  were  maximum  prices  per 
ton  of  2,240  pounds  free  on  board  cars  at  the  mines  and  they 
varied  in  accordance  with  the  grades  and  sizes  of  coal  as 
follows : 


Broken .  . 

Egg 

Stove . . . . 
Chestnut . 
Pea 


ite  Ash 

Red  Ash 

Lykens  Valley 

54-55 

$4-75 

$5.00 

4-45 

465 

4.90 

4.70 

4.90 

530 

4.80 

4.90 

530 

4.00 

The  price  of  White  Ash  pea  coal  was  reduced  by  the  Fuel 
Administrator  on  October  i,  1917,  to  $3.40;  a  price  of  $3.50 


THE    UNITED    STATES  267 

for  Red  Ash  pea  coal  and  of  $3.75  for  Lykens  Valley  pea  coal 
was  established  at  the  same  time. 

The  President's  prices  were  subsequently  added  to  and 
revised  at  different  times  by  the  Fuel  Administrator;  special 
prices  were  fixed  for  individual  mines,  for  special  coal  fields 
or  districts,  as  well  as  for  different  States.  Most  of  these 
revisions  raised  prices  ostensibly  because  of  wage  increases  to 
mine  workers,  but  also  in  order  to  assure  greater  profit  to 
mine  operators.  The  most  important  of  these  increases  was 
one  provided  by  an  order  of  October  27,  19 17,  which  raised 
the  price  of  bituminous  coal  by  45  cents  per  ton  above  the 
President's  prices,  and  another  which  increased  the  price  of 
anthracite  coal  by  35  cents  a  ton  on  December  i,  1917.' 

The  plan  adopted  by  the  Fuel  Administrator  was  to  fix 
prices  so  that  each  operator  should  receive  a  limited  profit. 
Hence  the  price  was  fixed  relatively  low  for  coal  from  thick 
seams,  easily  and  cheaply  mined  and  high  for  the  thin  and 
poor  seams,  the  cost  of  mining  from  which  is  much  greater. 
In  the  fixing  of  prices,  very  inefficient  small  mines,  remote 
from  transportation  facilities,  were  not  considered.  While 
differences  in  prices  existed  for  coal  of  equal  grade,  the  larger 
part  of  the  variations  in  the  prices  announced  for  bituminous 
coals  were  due  to  difference  in  quality  of  coal  and  to  freight 
differentials. - 

On  December  15,  191 7,  export  and  foreign  bunker  coal 
prices  were  fixed  at  $1.35  per  ton  above  the  domestic  scale; 
this  order  applied  to  all  countries  except  Mexico  and  Canada.^ 
The  seller  of  the  coal  or  such  other  agency  as  performed  the 
actual  work  of  bunkering  or  loading  was  allowed  to  add  the 
customary  or  proper  charges  for  storage,  towing,  elevation, 
trimming,  special  unloading  and  other  port  charges.  An 
amendment  to  the  order  issued  on  February  25,  1918,  pro- 
vided that  no  coal  could  be  invoiced  at  the  excess  price  except 
by  the  operator  or  dealer  who  actually  loaded  it  into  foreign 

'  Commercial  and  Financial  Chronicle,  December  8,  1917,  p.  2228. 

^  C.  R.  Van  Hise:  Conservation  attd  Regulation,  p.  152. 

'  U.  S.  Fuel  Administration,  Publication  No.  15  (Revised). 


268  PRICES    AND    PRICE    CONTROL   DURING    THE    WAR 

vessels  and  only  after  the  coal  had  been  so  loaded.  The 
amendment  stipulated  also  that  in  settling  the  price  of  coal 
for  foreign  bunkering  or  export  purposes,  no  jobber's  margin 
or  other  commission  in  addition  to  the  $1.35  per  ton  should 
be  added  to  the  price  of  the  coal. 

A  cut  of  10  cents  per  ton  in  the  price  of  bituminous  coal  was 
made  on  May  25,  1918.  The  reason  assigned  for  the  reduction 
was  that  certain  advantages  were  accorded  coal  operators 
through  the  installation  of  a  new  system  of  "even  car  supply" 
by  the  Railroad  Administration;'  the  railroads  agreed  to  pay 
fixed  prices  for  coal  and  to  abandon  the  practice  of  giving 
preferential  car  service  to  mines  furnishing  railroad  fuel;^ 
this  was  expected  to  effect  substantial  economies  in  the  min- 
ing and  shipping  of  coal. 

Jobbers'  Margins 

The  President's  order  of  August  2^,,  1917,  which  fixed  the 
provisional  anthracite  coal  prices,  established  also  jobbers' 
margins.  According  to  this  order, ^  for  the  buying  and  selling 
of  bituminous  coal  a  jobber  was  permitted  to  add  to  his  pur- 
chase price  a  gross  margin  not  in  excess  of  15  cents  per  ton  of 
2,000  pounds ;  for  buying  and  selling  of  anthracite  coal  a  jobber 
could  not  add  to  his  purchase  price  in  excess  of  20  cents  per 
ton  of  2,240  pounds  when  delivery  of  this  coal  was  to  be 
effected  at  or  east  of  Buffalo ;  a  gross  margin  not  to  exceed  30 
cents  per  ton  w^as  allowed  for  the  delivery  of  anthracite  coal 
west  of  Buffalo.  A  jobber's  gross  margin  could  be  increased 
by  5  cents  per  ton  of  2,240  pounds  when  the  jobber  incurred 
the  expense  of  rescreening  it  at  Atlantic  or  lake  ports  for 
transshipment  by  water. 

The  President's  order  was  supplemented  by  the  rulings  of 
the  Fuel  Administrator  issued  on  October  6.^  These  rulings 
referred  to  contracts  which  had  been  concluded  by  jobbers 

'  The  Iron  Age,  May  30,  1918,  p.  1425. 

^  Commercial  and  Financial  Chronicle,  June  i,  1918,  p.  2292. 

'  U.  S.  Fuel  Administration,  Publication  No.  3,  August  23,  1917. 

*  Ibid.,  No.  9. 


THE    UNITED    STATES  269 

previous  to  the  establishment  of  the  maximum  price  and 
margins.     They  were  as  follows: 

Free  coal  shipped  from  the  mines  subsequent  to  the  promulgation  of  the  Presi- 
dent's order  fixing  the  price  for  such  coal  shall  reach  the  dealer  at  not  more  than 
the  price  fixed  by  the  President's  order  plus  only  the  prescribed  jobber's  commis- 
sion (if  the  coal  has  been  purchased  through  a  jobber)  and  transportation  charges. 

A  jobber  who  had  already~contracted  to  buy  coal  at  the  time  of  the  President's 
order  fixing  the  price  of  such  coal,  and  who  was  at  that  time  already  under  contract 
to  sell  the  same,  may  fill  his  contract  to  sell  at  the  price  named  therein. 

A  jobber  who,  at  the  time  of  the  President's  order  fixing  the  price  of  the  coal  in 
question  at  the  mine,  had  contracted  to  buy  coal  at  or  below  the  President's  price, 
and  at  that  time  had  no  contract  to  sell  such  coal,  shall  not  sell  the  same  at  a  price 
higher  than  the  purchase  price  plus  the  proper  jobber's  commission  as  determined 
by  the  President's  regulation  of  August  23,  191 7. 

A  jobber  who,  at  the  time  of  the  President's  order  fixing  the  price  of  the  coal  in 
question,  was  under  contract  to  deliver  such  coal  at  a  price  higher  than  a  price 
represented  by  the  price  fixed  by  the  President  or  the  Fuel  Administrator  for  such 
coal  plus  a  proper  jobber's  commission  as  determined  by  the  President's  regula- 
tion of  August  23,  191 7,  shall  not  fill  such  contract  with  coal  purchased  after  the 
President's  order  became  effective  and  not  contracted  for  prior  thereto  at  a  price 
in  excess  of  the  President's  price  plus  the  proper  jobber's  commission. 

A  jobber  who,  at  the  date  of  the  President's  order  fixing  the  price  of  the  coal  in 
question,  held  a  contract  for  the  purchase  of  coal  without  having  already  sold  or 
contracted  to  sell  such  coal,  shall  not  sell  such  coal  at  more  than  the  price  fixed  by 
the  President  or  the  Fuel  Administrator  for  the  sale  of  such  coal  after  the  date  of 
such  order,  plus  the  jobber's  commission  as  fixed  by  the  President's  regulation  of 
August  23,  1917. 

According  to  an  announcement  made  on  November  8, 
1917,  contract  coal  which  a  jobber  had  purchased  at  a  price 
higher  than  the  maximum  could  be  sold  by  him  at  a  sufficient 
advance  so  that  his  profits  would  be  the  same  as  if  he  had 
obtained  coal  at  the  price  fixed.  In  order  to  take  advantage 
of  this  order,  the  jobbers  had  to  show  that  the  coal  was 
contracted  for  in  bona  fide  agreement  prior  to  the  President's 
proclamation.  The  coal  had  to  be  sold  to  the  purchasers 
designated  by  the  State  Fuel  Administration.' 

Retail  Prices 

Retail  prices  of  coal,  according  to  an  announcement  made 
by  the  Fuel  Administrator  on  September  30,  19 17,  were 
established  in  the  following  manner:     Coal  dealers  had  to 

1  C.  R.  Van  Hise:  op.  cit.,  p.  157. 


2/0  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

ascertain  their  retail  margins  in  191 5;  to  this  they  were  per- 
mitted to  add  an  amount  not  exceeding  30  per  cent  of  that 
margin,  including  their  profits  at  that  timeJ  Retail  dealers 
who  had  not  been  in  business  before  January  i,  1916,  were 
allowed  to  continue  to  sell  at  the  gross  margin  which  they  had 
received  during  the  period  in  which  they  had  been  in  business, 
provided  that  this  margin  did  not  exceed  that  which  was 
received  during  July,  1917." 

The  regulation  of  the  retail  sale  of  coal  was  placed  in  the 
hands  of  local  fuel  committees  of  citizens  where  there  were 
complaints  that  excessive  profits  were  made  by  retailers. 
These  committees,  after  ascertaining  the  retailer's  cost  of 
conducting  business,  reported  to  the  State  Fuel  Administra- 
trator  what  they  considered  to  be  the  proper  maximum 
retail  gross  margin  for  the  community.^  The  price  to  the 
consumer  consisted  of  this  margin  plus  the  cost  of  coal  at  the 
mine,  the  transportation  charges  and  the  jobber's  com- 
mission (when  sold  through  a  jobber)."* 

Bona  fide  contracts  enforceable  by  law,  made  before  October 
I,  were  not  affected  by  the  order.  However,  only  minimum 
amounts  were  to  be  delivered  under  such  contracts  as  long  as 
reasonable  requirements  of  other  consumers  had  not  been  met. 

Retail  dealers  were  under  an  obligation  to  ascertain  on  the 
first  and  sixteenth  days  of  each  calendar  month  the  average 
cost  to  them  of  coal  or  coke.  Monthly  reports  were  required 
by  the  United  States  Fuel  Administrator  and  the  Federal 
Trade  Commission;  these  reports  showed  the  cost  of  coal  or 
coke  received  by  the  dealers,  their  sales  prices  and  their  gross 
margins. 

By  a  decision  of  the  Fuel  Administration  passed  during 
the  latter  part  of  February,  retail  dealers  after  April  i,  1918, 
could  purchase  coal  at  the  same  price,  whether  they  bought 
it  directly  from  mines  or  through  jobbers.    It  was  stated  that 

'  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  November,  191 7,  p.  89. 

^  "Maximum  Gross  Margins  of  Retail  Coal  Dealers,"  U.  S.  Fuel  Administration, 
Publication  No.  7. 

^  "Fuel  Facts,"  Published  by  the  U.  S.  Fuel  Administration,  October,  1918,  p. 
10. 

*  U.  S.  Fuel  Administration,  Publication  No.  6. 


THE   UNITED    STATES  27I 

the  purpose  of  the  order  was  to  wipe  out  systematized  forms 
of  profiteering.'  To  continue  in  business,  the  jobbers  had  to 
revert  to  the  old  practice  of  looking  to  mine  operators  for 
compensation.  A  slight  increase  in  mine  price  was  to  provide 
for  operators'  added  expense. 

The  Fuel  Administration  in  its  handling  of  the  coal  situation 
during  the  first  half  of  191 7  committed  the  mistake  of  consid- 
ering the  problem  largely  from  one  angle  only,  that  of  price. 
The  sharp  advance  in  price  was  attributed  almost  solely  to 
exorbitant  profits  made  by  coal  mine  owners  and  coal  dealers; 
the  remedy  was  sought  in  price  fixing  and  in  the  establish- 
ment of  margins.  Not  until  shipments  to  Europe  of  food  and 
munitions  came  to  a  standstill,  because  of  lack  of  coal  at  the 
seaboard  terminals,  and  not  until  the  whole  industrial  war 
program  of  the  country  seemed  to  be  on  the  point  of  col- 
lapse, did  the  question  of  production  and  distribution  of  coal 
assume  the  importance  it  should  have  had  from  the  very 
beginning.  No  adequate  provisions  were  made  during  the 
summer  and  fall  of  191 7  to  stimulate  maximum  output  and 
early  wide  distribution.  Consumers  were  holding  off  in  the 
expectation  of  a  fall  in  price  and  they  were  encouraged  in  their 
attitude  by  the  statements  issued  by  the  Fuel  Administrator. 

Things  went  from  bad  to  worse  during  that  part  of  the  year 
when  reserves  should  have  been  accumulated  by  the  users  of 
coal.  In  the  week  of  August  13  production  reached  its  lowest 
point  in  the  year. 

An  unexpected  climax  came  on  January  16,  1918,  when  the 
Fuel  Administrator  issued  one  of  the  most  drastic  government 
regulations  brought  about  by  the  war.  The  order  directed 
that  all  factories  east  of  the  Mississippi  river  be  shut  down  for 
five  days  beginning  January  18,  191 8.  The  order  involved 
over  85  per  cent  of  the  country's  steam  plants  used  for 
manufacturing.  There  was  no  advance  notice  of  such  an 
order  and  no  opportunity  to  make  preparation. ^  In  addition 
to  the  shutting  down  of  factories,  a  request  was  made  that  for 

*  Commercial  and  Financial  Chronicle,  February  23,  1918,  p.  769. 
^  The  Nation's  Business,  March,  1918,  p.  8. 


2  72  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

ten  weeks  on  Monday,  offices,  factories  and  stores,  except  drug 
and  food  stores,  use  only  such  fuel  as  was  necessary  to  prevent 
damage. 

The  New  York  World,  which  on  most  occasions  supported 
the  government,  described  this  order  as  a  confession  of  in- 
competency, as  a  damning  indictment  of  the  Fuel  Adminis- 
tration. It  pointed  out  that  "even  Italy,  which  depends  for 
fuel  upon  the  scanty  supply  of  coal  doled  out  by  Great  Britain 
and  the  United  States,  has  never  undertaken  to  close  down  its 
industries  in  order  to  save  coal.  Nor  has  France,  where  the 
fuel  problem  has  been  acute  from  the  beginning  of  the  war."^ 

The  coal  trade's  main  criticism  of  the  handling  of  the  fuel 
situation  was  directed  at  the  administration's  unwillingness  to 
use  coal  experts — men  familiar  with  the  methods  of  getting 
results  with,  the  least  disturbance  of  the  established  procedure. 

In  a  memorandum  dated  November  12,  1918,  Mr.  Garfield 
gave  the  following  review  of  the  conditions  which  prompted 
the  order  and  of  the  results  achieved. ^ 

Notwithstanding  large  production  of  coal,  the  "stocking 
up"  for  the  winter  of  191 7-1 8  was  so  unsatisfactory  that  it 
was  evident  in  September,  191 7,  that  should  the  country  have 
a  severe  winter  and  should  the  government  speed  up  war 
preparation  faster  than  originally  intended,  an  acute  shortage 
of  coal  was  imminent.  Both  contingencies  occurred.  The 
conditions  in  Europe  upset  more  than  one  of  the  carefully 
coordinated  plans  of  the  government  leading  to  an  abnormal 
demand  for  fuel.  A  winter  of  greater  severity  than  the  country 
had  known  for  fifty  years  doubled  the  domestic  consumption 
of  coal.  The  railroads  were  blocked  for  days  at  a  time,  and 
while  consumers  were  near  the  end  of  their  supplies  mines 
stood  idle  because  of  lack  of  cars.  A  marked  slowing  up  in 
the  work  of  the  most  essential  war  industries  took  place.  Pig 
iron  production  was  cut  in  two.  Mills  working  on  ship  plates 
dropped  to  30  per  cent  capacity.  Meanwhile,  in  the  harbors 
of  the  country  hundreds  of  vessels  loaded  with  supplies  for 

1  The  Literary  Digest,  January  26,  19 18,  p.  6. 

'  U.  S.  Department  of  Labor,  Monthly  Labor  Review,  December,  1918,  pp.  164-167 . 


THE    UNITED    STATES  273 

the  Allies  and  the  American  soldiers  were  awaiting  bunker 
coal  and  all  efforts  to  provide  a  supply  proved  futile.  To  re- 
lieve the  situation  the  order  was  issued.  The  results  of  it  were 
immediate.  Conditions  improved  so  much  and  so  quickly 
that  a  subsequent  order  removed  the  restriction  after  the 
establishments  affected  had  been  closed  only  three  of  the  nine 
Mondays  specified  in  the  original  order.  Dr.  Garfield  stated 
that  neither  the  severity  of  the  remedy  nor  its  suddenness  could 
hav^  been  avoided.  As,  according  to  his  own  statement,  the 
condition  existed  for  several  weeks  previous  to  the  issuance  of 
the  order,  one  wonders  why  nothing  had  been  done  to  relieve 
the  situation  before  the  issue  of  the  "drastic"  and  "unprece- 
dented" decree. 

Since  the  coal  shortage  in  the  winter  of  191 6-17,  efforts 
have  been  made  to  further  stimulate  the  production  of  coal. 
Due  to  these  efforts  the  output  increased  from  590,098,175 
tons  in  1916  to  651,402,374  tons  in  191 7.  However,  much  of 
the  coal  shipped  to  the  market  during  the  latter  year  contained 
slate,  shale  and  dirt.  To  prevent  as  much  as  possible  the 
shipment  of  such  coal,  the  Fuel  Administration  by  an  order 
effective  June  i,  191 8,  prohibited  the  sale,  shipment  or 
distribution  of  coal  which  on  account  of  its  content  of  impuri- 
ties would  not  have  been  considered  merchantable  prior  to 
January  i,  1916.  In  case  of  violation  of  this  rule,  50  cents 
per  ton  could  be  deducted  from  the  government  price  if  the 
coal  had  been  already  loaded  into  cars  or  bins.^ 

The  difficulties  encountered  in  connection  with  price  fixing 
of  bituminous  coal  lay  in  the  decentralization  of  the  industry 
as  well  as  in  the  fact  that  normally  part  of  the  supply  of  bitu- 
minous coal  comes  from  many  small  mines  run  in  a  very 
inefficient  manner.  Some  of  these  could  not  be  profitably 
operated  after  prices  were  first  fixed;  they  shut  down.  Sub- 
sequent price  increases  improved  the  situation,  but  "the  period 
of  demoralization  which  followed  the  original  price  fixing  left 
its  impress  upon  the  coal  industry:  many  unskilled  laborers 

'  W,  Notz:  "The  World's  Coal  Situation  during  the  War,"  Journal  of  Political 
Economy,  July,  1918,  p.  681. 


274  PRICES    AND    PRICE   CONTROL   DURING    THE   WAR 

left  the  coal  fields;  banks  in  some  cases  hesitated  to  finance 
coal  shipments  until  the  clearing  up  of  the  question  of  margin 
and  resale  of  coal  purchased  at  high  prices. "^ 

While  concentration  characterizes  the  anthracite  coal 
industry,  the  problem  of  price  fixing  in  this  industry  was 
greatly  complicated  by  the  varying  percentages  of  sizes  pro- 
duced by  different  mines  in  the  same  region  and  the  still  more 
widely  varying  percentage  of  sizes  produced  by  the  different 
regions. 2  In  order  to  arrive  at  some  definite  conclusions^as  to 
what  should  be  the  height  of  bituminous  and  anthracite  coal 
prices,  the  Engineers'  Committee  was  constituted  in  January, 
191 8,  for  the  purpose  of  making  a  general  review  of  costs  and 
of  submitting  to  the  United  States  Fuel  Administration  the 
results  of  careful  studies  of  the  costs  of  producing  coal  through- 
out the  country. 

The  committee's  first  work  was  a  study  of  price  fixing  meth- 
ods applicable  to  coal  producing  conditions.  It  attempted  to 
evolve  a  method  which  would  fill  as  nearly  as  practicable  the 
following  requirements: 

1.  Result  in  a  price  fair  to  the  public. 

2.  Prevent  excessive  prices  or  profiteering. 

3.  Prevent  a  multiplicity  of  prices  in  any  district. 

4.  Encourage  legitimate  production. 

5.  Discourage    production    from    inefficient    and    unduly 

costly  operations. 

6.  Insure  to  the  producer  "the  cost  of  production,  including 

the  expense  of  operation,  maintenance,  depreciation, 
and  depletion  with  a  just  and  reasonable  profit,"  as 
required  by  the  Lever  Act. 

The  system  of  price  fixing,  as  recommended  by  the  com- 
mittee, was  based  upon  a  study  of  the  costs  obtained 
from  the  individual  sheets  filed  by  each  operator  with  the 
Federal  Trade  Commission.  These  figures,  with  the  percent- 
ages of  each  cost  in  the  total   production  of  each  district, 

^  B.  M.  Anderson:  "Value  and  Price  Theory  in  Relation  to  Price  Fixing  and 
War  Finance,"  American  Economical  Review  Supplement,  March,  1918,  p.  252. 
*  U.  S.  Fuel  Administration,  Publication  No.  29,  September  20,  1918. 


THE    UNITED    STATES  275 

were  plotted  on  diagrams,  showing  graphically  the  range  and 
the  extent  of  variation  in  each  district.  On  these  diagrams  a 
"bulk  line"  was  drawn  indicating  the  sources  of  indispensable 
tonnage.  This  line  was  considered  a  base  to  which  the  Fuel 
Administrator  personally  added  a  margin  in  his  judgment 
necessary  for  each  district. 

This  method  was  adopted  by  the  Fuel  Administrator.  With 
regard  to  the  labor  situation  there  was  a  lack  of  coordina- 
tion t>etween  the  Fuel  Administration  and  the  War  Depart- 
ment. The  number  of  laborers  working  in  anthracite  mines 
decreased  from  177,000  in  1916  to  153,534  '^^  ^9^7-  Mr. 
Garfield  had  been  permitting  the  depletion  of  unreplaceable 
labor,  both  skilled  and  unskilled,  without  raising  his  voice 
against  it.'  Thousands  of  men  left  the  coal  fields  also  for 
more  lucrative  employment.  In  the  bituminous  mines  the 
trouble  has  been  largely  due  not  to  the  shortage  of  labor  but 
to  the  lack  of  locomotives  and  cars  for  the  haulage  of  coal 
away  from  the  mines. ^  This  inadequacy  of  transportation 
facilities  checked  production.  It  never  rose  sufificiently  to 
meet  the  needs  of  the  nation  at  war. 

Just  before  the  conclusion  of  the  armistice  the  Fuel  Admin- 
istration admitted  that  it  was  certain  that  the  enormous 
demands  for  fuel  could  not  be  fully  met  by  production.^ 

On  February  i,  1919,  the  Fuel  Administration  discontinued 
all  price  control  and  much  of  the  supervision  over  distribution 
of  coal,  coke,  oil  and  natural  gas.  With  the  passing  of  control 
over  fuel,  most  of  the  activities  of  the  Fuel  Administration 
ceased.  The  administration,  however,  under  the  Lever  Act 
can  not  disband  until  peace  has  been  declared. 

Coke 

On  November  9,  1917,  maximum  base  prices  for  Beehive 
coke  manufactured  east  of  the  Mississippi  river  were  fixed  as 
follows : 

1  A.  J.  Nock:  "The  Alarming  Coal  Situation,"  The  Nation,  August  3,  1918, 
p.  116. 

2  The  Literary  Digest,  February  21,  1918,  p.  9. 
»  "Fuel  Facts,"  p.  6. 


276  PRICES   AND    PRICE    CONTROL    DURING    THE   WAR 

48-hour  blast  furnace $6.00  per  ton  of  2,000  lbs.,  f.  o.  b.  at  the 

place  of  manufacture 
72-hour  selected  foundry $7.00  per  ton  of  2,000  lbs.,   f.  o.   b.  at  the 

place  of  manufacture 
Crushed,  over  i  inch  in  size $7-30  per  ton  of  2,000  lbs.,  f.  o.  b.  at  the 

place  of  manufacture 

Subsequent  orders  established  prices  for  coke  from  various 
plants  in  Alabama,  Colorado,  Georgia,  New  Mexico,  Okla- 
homa, Pennsylvania,  Tennessee,  Virginia,  Washington  and 
West  Virginia.  These  prices  varied  considerably  in  each 
State;  thus,  while  the  price  of  blast  furnace  coke  made  from 
coal  mined  in  the  Big  Seam  district  of  Alabama  was  fixed  at 
$6.75,  the  Empire  Coal  Company's  blast  furnace  coke  in  the 
same  State  was  fixed  at  $10.50.' 

Additional  compensation  was  allowed  for  deliveries  or 
other  services.  Producers  of  coke  at  other  points  than  at  or 
adjacent  to  the  mine  could  demand  a  fair  differential  to  com- 
pensate them  for  the  freight  charges.  - 

Maximum  prices  for  by-product  coke  and  gas  coke  were 
established  on  November  17.  For  by-product  coke  they  were 
as  follows: 

Run  of  oven $6.00  per  ton  of  2,000  lbs.  f.  o.  b.  cars  at  the  plant 

Selected  foundry 7.00  per  ton  of  2,000  lbs.  f .  o.  b.  cars  at  the  plant 

Crushed,  over  i  inchage 6.50  per  ton  of  2,000  lbs.  f.  o.  b.  cars  at  the  plant 

The  maximum  price  of  gas  coke  for  industrial  or  metallurgical 
use  was  fixed  to  be  the  same  as  the  price  for  the  corresponding 
grade  of  coke  produced  in  by-product  ovens. ^  Gas  coke 
sold  for  household  purposes  was  to  be  sold  at  the  government 
price  for  anthracite  coal  in  the  same  locality. 

On  July  8,  191 8,  an  order  was  issued  which  established  a 
more  definite  control  of  gas  coke  prices.  It  gave  base  prices  for 
gas  coke  at  plants  in  those  districts  where  anthracite  coal  was 
not  obtainable  and  in  those  where  it  was  obtainable.  The 
new  schedule  of  prices  for  the  first  districts  was: 

1.  Run  of  retorts $5  •  50 

2.  Run  of  retorts  screened  above  f  inches  in  size 6.00 

3.  Run  of  retorts  screened  and  sized  about  f  inches  in  size 6.50 

4.  Run  of  retorts  screened  and  sized  between  \  and  f  inches 4 -SO 

1  Price  Fixing  Bulletin  No.  11,  "Fuels,"  pp.  28-31. 

^  C.  R.  Van  Hise:  Conservation  and  Regulation,  p.  151. 

2  U.  S.  Fuel  Administration,  Publication  No.  13,  p.  3. 


THE   UNITED    STATES  277 

In  those  districts  where  anthracite  was  obtainable  the  price 
of  gas  coke  varied  in  accordance  with  its  use.  In  case  of 
sales  to  dealers  for  distribution  in  less  than  car  lots  or  deliv- 
ered direct  to  consumers  for  household  purposes  the  price  was 
for  coke  screened  and  sized  above  f  inches,  the  same  as  for 
stove  anthracite  in  the  same  locality.  A  25  cents  reduction 
was  accorded  for  size  about  f  inches  and  a  75  cents  reduction 
for  nonscreened  coke.  Prices  for  coke  sold  for  purposes  other 
than  just  mentioned  were  the  same  as  for  gas  coke  in  localities 
where  anthracite  was  not  obtainable.  This  order,  which  was 
superseded  by  one  amending  it,  as  from  August  i,  191 8, 
fixed  also  prices  for  breeze  (to  be  half  the  price  established  for 
run-of-retorts  coke,  unscreened)  and  for  coke  made  in  beehive 
ovens. 

The  order  which  became  effective  on  August  i,  1918, 
contained  among  its  various  regulations  a  statement  that 
commissions  to  selling  agencies  or  jobbers'  margins  were  to 
be  paid  by  vendors  and  were  not  to  be  added  to  established 
prices. 

Charcoal 

The  price  of  charcoal  was  fixed  on  July  9,  1918,  per  bushel  of 
twenty  pounds,  f.  o.  b.  cars  at  point  of  shipment,  for  lump  in 
bulk,  at  30  cents,  for  lump  in  bags,  at  32  cents,  and  for  screen- 
ings in  bags  at  20  cents.' 

Petroleum  Products 

Maximum  prices  for  petroleum  products  which  were  effec- 
tive from  May  20,  1918,  to  July  19,  1918,  applied  only  to 
the  purchases  by  the  Allied  governments.  The  price  for  fuel 
oil  was  5.25  cents  per  gallon,  f.  o.  b.  gulf  ports  and  7.50 
cents  a  gallon,  f.  o.  b.  Norfolk,  Baltimore,  Philadelphia  and 
New  York.  Other  prices  were  for  standard  white  refined 
kerosene,  7.50  and  8.25  cents  respectively;  for  gasoline,  21 
and  23.50  cents,  and  for  aviation  naphtha,  30  and  32  cents. 

1  Price  Fixing  Bulletin,  No.  11,  p.  34. 


CHAPTER   VIII 

Iron  and  Steel 

The  first  authoritative  statement  regarding  price  fixing  of 
iron  and  steel  products  was  issued  by  the  Secretary  of  War  on 
July  12,  1 91 7.  After  referring  to  the  assurance  of  the  steel 
men  that  their  entire  product  would  be  available  for  the  pur- 
pose of  carrying  on  the  war  and  that  they  were  doing  every- 
thing possible  to  stimulate  an  increased  production  and  speed 
deliveries,  the  Secretary  stated  that  "the  price  to  be  paid  for 
the  iron  and  steel  products  furnished  was  left  to  be  determined 
after  the  inquiry  by  the  Federal  Trade  Commission  is  com- 
pleted, with  the  understanding  that  the  price,  when  fixed, 
would  insure  reasonable  profits  and  be  made  with  reference 
to  the  expanding  needs  of  this  vital  and  fundamental 
industry."'- 

There  was  no  upward  trend  in  iron  and  steel  quotations 
until  nearly  a  year  after  the  outbreak  of  the  war;  in  fact,  from 
July,  1914,  to  the  middle  of  1915,  prices  continued  at  the  low 
level  to  which  they  were  carried  by  the  depression  of  19 14. 
Taking  the  relative  price  from  July,  1913,  to  June,  1914,  as 
equal  100,  the  yearly  average  price  of  pig  iron  fell  from  no 
in  1913  to  97  in  1914  and  to  103  in  1915;  during  the  same 
period  the  price  of  iron  ore  declined  from  103  to  92  and  85, 
and  the  price  of  coke  from  118  to  88  and  87.2  .The  relative 
price  of  best  refined  iron  bars  was  107  in  1913,  89  in  1914  and 
97  in  1917;  the  price  of  bessemer  steel  billets  117  in  1913,  92 
in  1914  and  106  in  1915,  the  price  of  steel  bars  no  in  1913, 
91  in  1914  and  104  in  I9I5.''  Since  the  second  half  of  1915, 
under  the  stimulus  of  war  orders,  prices  began  to  rise  at  an 

^"Maximum  Prices  on  Iron  and  Steel  Products,"  American  Iron  and  Steel 
Institute,  November  15,  1918,  p.  7. 

2  Price  Fixing  Bulletin,  "Market  Prices  of  Commodities  under  Control,"  War 
Industries  Board,  November,  19 18,  p.  3. 

3  Ibid.,  pp.  28,  30,  33. 

278 


THE    UNITED    STATES  279 

accelerating  rate,  reaching  their  highest  point  in  July,  191 7. 
Of  the  materials  used  in  the  production  of  pig  iron,  coke  has 
had  the  most  extreme  price  fluctuations.  Its  price  advanced 
from  $1.75  per  ton  in  July,  1915,  to  $12.25  in  July,  1917,  or 
494  per  cent  above  its  prewar  base. 

The  most  marked  rise  in  the  price  of  iron  ore  occurred  in 
December,  191 6;  up  to  that  time  the  price  of  this  material 
fluctuated  within  a  comparatively  narrow  range;  it  rose  from 
$4.20  in  November,  1916,  to  $5.70  in  December  of  the  same 
year,  a  rise  of  53  per  cent  above  its  prewar  rate;  the  price 
remained  at  this  level  through  the  subsequent  months  and 
was  continued  when  iron  ore  came  under  control. 

Prices  of  iron  ore  and  of  coke  are  significant  because  of  their 
bearing  on  the  price  of  pig  iron.  About  two  tons  of  ore  and 
one  ton  of  coke  are  required  for  the  production  of  a  ton  of 
pig  iron;  thus  ordinarily  the  cost  of  ore  is  a  larger  factor  of 
expense  than  the  cost  of  coke.  With  the  rapid  rise  in  the 
price  of  coke  during  1916  and  191 7,  the  cost  of  coke  began  to 
bear  more  heavily  on  the  price  of  pig  iron.  However,  this 
was  not  as  determining  a  factor  as  may  have  been  expected, 
as  probably  only  small  quantities  of  coke  were  purchased  at 
the  high  market  prices.'  The  price  of  pig  iron  advanced  from 
$13.00  in  July,  1914,  to  its  record  price  of  $52.50  for  the  same 
month  in  1917. 

The  prices  of  finished  rolled  steel  products  rose  at  a  more 
rapid  rate  and  covered  a  wider  range  than  either  the  prices 
of  pig  iron  or  of  iron  products.  This  independent  advance 
may  be  attributed  to  the  limited  capacity  for  making  steel 
as  well  as  for  making  certain  types  of  finished  products. 
Steel  plates,  in  response  to  a  heavy  war  demand,  led  the 
advance;  their  relative  price  rose  from  97  in  July,  191 5,  to 
357  in  April,  1917,  and  to  714  in  July,  1917;  steel  billets, 
sheet  bars,  structural  shapes,  steel  plates  and  skelp  rose  also 
relatively  higher  in  191 7  than  did  pig  iron.  The  rise  of  these 
products  was  as  follows,  like  in  all  previous  cases,  the  average 

'  Price  Fixing  Bulletin.  "  Market  Prices  of  Commodities  under  Control," 
War  Industries  Board,  November,  1918,  p.  i. 

19 


280  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

of  market  prices  from  July  i,  1913,  to  June  30,  1914,  being 
taken  as  100: 

July,  1915      April,  1917      July,  1917 

Steel  billets,  open  hearth 103  344  436 

Sheet  bars,  open  hearth loi  .            331  464 

Structural  shapes 98  260  424 

Steel  plates,  rank 97  357  7^4 

Skelp,  steel,  grooved 94  278  476 

While  the  ppices  were  soaring,  two  investigations  of  the 
steel  industry  were  being  conducted  in  order  to  determine  the 
iron  and  steel  making  costs  and  by  this  means  to  arrive  at  a 
basis  for  the  establishment  of  a  fair  price  to  be  paid  by  the 
government  to  the  manufacturers.  One  investigation  was 
carried  on  by  the  Federal  Trade  Commission,  the  other  by 
the  Senate  Committee  on  Interstate  Commerce,  in  conjunc- 
tion with  the  latter's  inquiry  into  coal,  oil,  copper  and  other 
costs. 

Not  much  good  was  expected  from  the  work  of  these  agen- 
cies by  the  iron  and  steel  interests,  one  of  whose  apparent 
spokesmen.  The  Iron  Age,  charged  that  the  investigators  were 
not  equipped  to  make  the  investigation  and  were  not  com- 
petent to  say  what  amount  should  be  added  for  profit,  in  view 
of  all  interests  to  be  conserved  in  such  critical  time  as  the  one 
through  which  the  country  was  passing.'  This  periodical 
hinted  that  governmental  price  regulation  might  lead  to  the 
unsettling  of  business  at  the  very  time  when  business  should 
be  kept  prosperous,  and  it  suggested  as  an  alternative  to  price 
control  a  regulation  of  industry  which  would  facilitate  the 
flow  of  material,  thus  permitting  the  fulfilment  of  existing 
obligations.  According  to  The  Iron  Age,  confusion  arose 
from  inability  to  carry  out  contracts  entered  into  between 
producers  and  consumers;  this  situation  could  not  be  remedied 
by  price  fixing  which  would  naturally  apply  to  future  business 
transactions.  While  the  periodical  admitted  that  some  form 
of  regulation  was  necessary,  it  favored  action  by  producers 
under  governmental  sanction  to  direct  action  by  government 
authorities,  the  first  having  fewer  possibilities  of  harm.^     It 

^  The  Iron  Age,  June  28,  1917,  p.  1563. 
"^  Ibid.,  July  12,  1917,  p.  88. 


THE    UNITED    STATES  28 1 

advocated  "that  the  government  provide  sufficient  transpor- 
tation facilities,  that  it  extend  aid  to  the  erection  of  additional 
blast  furnaces  and  that  it  adopt  a  more  vigorous  policy  in 
dealing  with  labor." 

Although  it  had  been  advanced  that  the  increase  in  iron 
and  steel  prices  was  largely  due  to  the  increase  in  the  cost  of 
production,  there  was  in  reality  very  little  r«lation  between 
the  two.  The  United  States  Government,  private  consumers 
and  representatives  of  the  Allies  were  bidding  against  each 
other  and  driving  prices  upwards  irrespective  of  any  costs. 
Some  of  the  larger  manufacturers  tried  to  stabilize  prices  by 
withdrawing  from  the  market  except  for  contracts  of  great 
importance,  but  this  resulted  merely  in  the  centering  of  the 
bids  on  the  minor  producers,  thus  occasioning  a  still  sharper 
price  advance. 

On  September  24,  191 7,  the  President  approved  the  first 
maximum  prices  agreed  upon  by  the  War  Industries  Board 
and  the  representatives  of  the  iron  ore,  pig  iron  and  steel 
interests.  The  prices  became  effective  immediately,  subject 
to  revision  on  January  i,  191 8.  The  prices  agreed  upon  were 
as  follows:^ 

Commodity  Basis  Prices  Agreed  Upon 

Iron  ore Lower  Lake  ports 5  05  per  G.  T. 

Coke Connellsville 6 .00  per  N.  T. 

Pig  iron 33  •  00  per  G.  T. 

Steel  bars Pittsburgh-Chicago 2  .  90  per  100  lbs. 

Shapes Pittsburgh-Chicago 3  00  per  100  lbs. 

Plates Pittsburgh-Chicago 3-25  per  100  lbs. 

It  was  stipulated  that  there  should  be  no  reduction  in  the 
rate  of  wages  and  that  the  prices  should  apply  to  the  pur- 
chases not  only  by  the  government,  but  also  by  the  Allies  and 
by  the  general  public.  The  steel  men  pledged  themselves  to 
exert  every  effort  necessary  to  keep  up  the  production  to  the 
maximum  of  the  past  as  long  as  the  war  should  last. 

The  War  Industries  Board  took  upon  itself  the  placing  of 
orders  and  the  supervision  "of  the  output  of  the  steel  mills 
in  such  manner  as  to  facilitate  and  expedite  the  requirements 

1  Official  Bulletin,  September  25,  1917. 


282  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

» 

of  the  government  and  its  Allies  for  war  purposes  and  to 
supply  the  needs  of  the  public  according  to  their  public  im- 
portance and  in  the  best  interest  of  all,  as  far  as  practicable."^ 

\^'ith  the  establishment  of  these  basic  prices  the  iron  and 
steel  industry  was  saved  from  the  intolerable  situation  into 
which  it  had  drifted.  Whether  the  steel  manufacturers  were 
merely  responskbile  for  allowing  buyers  to  bid  up  the  market, 
without  taking  some  definite  measures  to  prevent  the  move- 
ments, or  whether  they  themselves  took  an  active  part  in 
advancing  the  prices,  is  a  debatable  question. ^  The  mistake 
was  made,  and  the  result  of  this  mistake  was  a  market  at  the 
beginning  of  July,  191 7,  which  was  vastly  different  from  that 
which  the  industry  had  always  had  hitherto.  It  was  a  market 
for  early  deliveries.  For  late  deliveries,  even  for  the  early 
part  of  19 1 8,  the  mills  were  not  quoting  and  the  buyers  were 
not  inquiring.^  Only  those  whose  necessities  were  compelling 
them  to  pay  any  price  were  buying.  The  industry  was  seem- 
ingly unable  to  let  down  prices  easily  and  smoothly  to  a 
regular  trading  basis  and  the  things  were  drifting  along  with 
no  alternative  in  sight. 

There  was  some  discussion  as  to  whether  price  regulation 
should  be  made  to  apply  to  existing  contracts.  A  large 
amount  of  material  had  been  contracted  for  at  high  prices  for 
future  delivery.  It  was  pointed  out  by  the  Federal  Trade 
Commission^  that  unless  contracts  for  high  priced  basic 
materials  were  suspended,  the  purpose  of  price  regulation 
would  be  largely  defeated  and  that  a  great  deal  of  inequity 
would  result  because  of  the  differentials  in  price  between  the 
government  price  on  the  one  hand  and  the  contract  price  on 
the  other.  In  a  scarce  market  the  producers  might  also  be 
disposed  to  fill  only  high  priced  contracts,  leaving  no  material 
for  the  open  market  at  the  fixed  prices,  or  they  might  in  mak- 
ing new  sales  at  the  prices  just  fixed  find  difficulty  in  per- 

1"  Maximum  Prices  on  Iron  and  Steel  Products,"  ylwmcaw /row  and  Steel  Insti- 
tute, p.  8. 

*  The  New  York  Evening  Post,  December  31,  1917,  p.  21. 
2  Ibid.,  p.  21. 

*  Commissioner  Davies'  testimony  before  the  Senate  Committee  on  Interstate 
Commerce. 


THE    UNITED    STATES  283 

suading  a  competitor  that  he  should  continue  to  pay  $io  or 
$20  higher  as  stipulated  by  contract.  The  steel  producers, 
however,  were  opposed  to  contract  abrogation,  though  they 
did  advocate  voluntary  revision  on  the  part  of  the  sellers  in 
cases  when  peculiar  hardship  was  worked  by  the  contracts.^ 
It  was  also  maintained  that  consumers  woi^Jd  gain  nothing 
and  possibly  lose  out  by  canceling  contracts;  the  products  had 
already  been  sold  on  the  basis  of  prices  made  in  these  con- 
tracts ;  so  that  the  lower  contract  prices  on  the  one  end  would 
mean  a  readjustment  of  selling  prices  at  the  other.  It  was 
finally  agreed  that  the  price  regulation  should  not  afifect  the 
bona  fide  contracts  made  either  with  individuals  or  with  the 
government. 

The  agreement  reduced  the  prevailing  prices,  according  to 
the  Committee  on  Public  Information,  in  the  case  of^ 

Coke,  from  $16.00  to  $6.00  or  62.5  per  cent 
Pig  iron  from  $58.00  to  $33.00  or  43.1  per  cent 
Steel  bars  from  $5.50  to  $2.90  or  47.3  per  cent 
Siiapes  from  $6.00  to  $3.00  or  50  per  cent 
Plates  from  $11.00  to  $3.25  or  70.5  per  cent 

Fixed  prices,  while  presenting  a  considerable  reduction  over 
current  quotations,  were  on  an  average  83  per  cent  higher 
than  prices  which  prevailed  at  the  beginning  of  1916,  when 
Judge  Gary  advised  caution  and  expressed  the  fear  that  there 
was  "inflation."^  The  Federal  Trade  Commission's  opinion 
of  the  iron  and  steel  prices  was  that  while  they  prevented  the 
steel  market  from  running  away,  they  strengthened  the  posi- 
tion of  the  low  cost  producers  and  enriched  them  by  profits 
which  were  without  precedent.'* 

In  finding  cost  in  the  steel  industry,  the  commission  divided 
the  steel  makers  into  four  groups:  (i)  the  fully  integrated 
mills,  (2)  the  mills  which  start  with  the  manufacture  of  pig 
iron,  (3)  the  mills  that  start  with  steel  furnaces  and  (4)  the 
mills  that  make  rolled  products  from  purchased  semi-finished 
steel.     The  United  States  Steel  Corporation  belongs  to  class 

1  The  Iron  Age,  October  ii,  19 17. 

'  Commercial  and  Financial  Chronicle,  June  29,  1918,  p.  2693. 

'  The  New  York  Evening  Post,  December  31,  1918,  p.  17. 

*  "  Profiteering,"  65th  Cong.  2d  Sess.  Sen.  Doc.  No.  248,  p.  6. 


284  PRICES    AND    PRICE    CONTROL    DURING    THE    WAR 

one.  Its  profits  expressed  in  terms  of  the  total  amount  invested 
in  the  business  showed  net  earnings  as  follows: 

1912 4.7  per  cent   1915 5.2  per  cent 

1913 5.7  percent   1916 15.6  percent 

1914 2.8  percent   1917 24.9  percent 

The  net  income  of  the  Steel  Corporation,  before  deducting- 
federal  income  and  excess  profits  tax  in  191 7,  was: 

1912 $77,075,217      1915 $97,967,962 

1913 105,320,691      1916 294,026,564 

1914 46,520,407      1917 478,204,343 

The  federal  income  and  excess  profits  taxes  of  the  Steel  Cor- 
poration for  191 7  were  $233,465,435,  which  left  for  net  income 
$244,738,908.^ 

Mills  in  classes  2,  3  and  4  also  made  heavy  profits  in  1917. 
The  commission  gives  figures  for  ten  mills  in  class  3,  which 
showed  the  profits  in  191 7,  fluctuating  from  30.24  per  cent  on 
investment  for  Eastern  Steel  Co.,  to  159.01  for  West  Penn 
Steel  Co.  and  319.67  per  cent  for  Nayle  Steel  Co. 

The  set  prices  were  no  lower,  on  the  whole,  than  the  invoice 
prices  which  obtained  upon  shipment  made  by  the  large  com- 
panies during  the  second  quarter  of  the  year,  and  upon  which 
they  made  their  record  earnings.^  Price  fixing  scaled  down 
the  quoted  market  and  also  the  prices  realized  by  the  smaller 
steel  producers,  those  who  do  not  customarily  book  orders  far 
ahead. 

Large  producers,  like  Judge  Gary,  E.  A.  S.  Clarke,  president 
of  the  Lackawanna  Steel  Co.,  W.  S.  Horner,  president  of  the 
National  Association  of  Sheet  and  Tin  Plate  Manufacturers, 
and  others,  whose  opinions  were  canvassed  by  The  Iron  Age, 
expressed  themselves  as  pleased  with  the  set  prices, =*  with  a 
few  exceptions,  characterizing  them  as  fair  and  reasonable. 
On  the  other  hand  there  was  a  great  deal  of  public  dissatisfac- 
tion; it  was  advanced  that  the  elaborate  investigations  of  the 
Federal  Trade  Commission  concerning  costs  had  gone  for 
naught  and  that  the  agreed  prices  should  have  been  much 

1  "Profiteering,"  65th  Cong.  2d  Sess.  Sen.  Doc.  No.  248,  p.  6. 
*  The  New  York  Evening  Post,  December  31,  1917,  p.  22. 

2  The  Iron  Age,  September  25,  1917,  p.  757. 


THE    UNITED    STATES  285 

lower. ^  The  comparatively  high  prices  were  justified  on  the 
ground  that  they  had  to  be  fixed  at  a  level  which  would  keep 
in  full  operation  every  mill  and  blast  furnace  which  contrib- 
uted appreciably  to  the  country's  supply.  They  were  based 
on  the  cost  of  production  to  the  high  cost  producers. 

The  following  table  gives  the  prices  which  prevailed  during 
the  four  years  previous  to  the  war  as  compared  with  govern- 
ment prices: 

IRON   AND   STEEL   PRICES    IN    DOLLARS   PER   GROSS  TON" 

Aver.  Govt. 

1911        1912        1913        1914        for  4  Price 

Yrs.  (Sept.  24) 
Mesaba  ore,  non-Bessemer  ..  .      $3.50     $2.85     $3.40     $2.85     $3.15  $5.05 
No.  2  foundry  pig  iron,  Phila- 
delphia       15.21      16.03     16.54     14.73     15.63  33  + 

No.  2  foundry  pig  iron  at  Chi- 
cago furnace ...  . 14.83     15.32     15.85     13.60     14.90  33 

No.  2  foundry  pig  iron,   Cin- 
cinnati       13.67     14.93     14.90     13.41      14.23        

Bessemer  pig  iron,  Pittsburgh.      15.71      1594     17.12     14.89     15.92  36  + 

Basic  pig  iron,  valley  furnace.      13.07     13. 92     14.71      12.87     13.64  33 

On  October  1 1  maximum  prices  were  fixed  for  blooms,  bil- 
lets, slabs,  sheet  bars,  wire  rods,  shell  bars  and  skelp,  and  on 
November  5  for  sheets,  pipe,  cold  rolled  steel,  scrap,  wire  and 
tin  plate.  All  prices  were  subject  to  revision  January  i,  191 8. 
On  the  recommendation  of  the  War  Industries  Board  they 
were  continued  unchanged  until  March  31,  191 8.  The  fol- 
lowing prices  were  agreed  upon.^ 

Basis  Price 

(Per  G.  T.) 

Blooms  and  billets,  4x4  in.  and  larger.  . Pittsburgh-Youngstown $47.50 

Billets,  under  4  x  4  in Pittsburgh-Youngstown 51   00 

Slabs Pittsburgh-Youngstown 50 .00 

Sheet  bars Pittsburgh-Youngstown 51  00 

Wire  rods Pittsburgh 57-00 

(Per  100  lbs.) 

Shell  bars,  3  to  5  in Pittsburgh 3  .25 

Over  5  to  8  in Pittsburgh 3  .  50 

Over  8  to  10  in Pittsburgh 4 .00 

Over  10  in Pittsburgh 4.00 

Skelp,  grooved Pittsburgh 2  .90 

Skelp,  universal Pittsburgh 3-15 

Skelp,  sheared Pittsburgh 3  •  25 

^  Berglund:  "Price  Fixing  in  Iron  and  Steel  Industry,"  Quarterly  Journal  of 
Economics,  p.  612. 

2  The  Iron  Age,  October  4,  191 7,  p.  833. 

'"Maximum  Prices  on  Iron  and  Steel  Products,"  American  Iron  and  Steel 
Institute,  November  15,  1918,  pp.  8-10. 


286  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

SHEETS 

(Per  1 00 lbs.') 

No.  28  black  sheets,  f.  o.  b.  Pittsburgh $5  00 

No.  10  blue  annealed  sheets,  f.  o.  b.  Pittsburgh 4.25 

No.  28  galvanized  sheets,  f.  o.  b.  Pittsburgh 6.25 

The  above  prices  to  apply  to  both  Bessemer  and  open-hearth  grades. 

PIPE 
On  i  in.  to  3  in.  black  steel  pipe — discount  52  and  5  and  2|  per  cent,  f.  o.  b.  Pitts- 
burgh. 

COLD   ROLLED   STEEL 

17  per  cent  discount  from  March  15,  19 15,  list  f.  o.  b.  Pittsburgh. 

SCRAP 

F.  O.  B. 

Consuming  Point 

(Per  G.  T.) 

No.  I  heavy  melting $30 .  00 

Cast  iron  borings  and  machine  shop  turnings 20 .00 

No.  I  railroad  wrought 35-00 

WIRE 
Plain  wire,  f.  o..b.  Pittsburgh $3.25  per  100 lbs. 

TIN    PLATE 
Coke  base,  Bessemer  and  open  hearth,  f.  o.  b.  Pittsburgh . .  .$7.75  per  100  lb.  box 

Schedules  of  differentials  to  be  applied  to  steel  products  in 
more  advanced  stages  of  manufacture  were  gradually  evolved 
by  the  General  Committee  on  Steel  and  Steel  Products  of  the 
American  Iron  and  Steel  Institute.  Recommendations  for 
the  adoption  of  such  schedules  were  made  on  November  13, 
November  20  and  December  22,  1917,  and  January  7,  1918. 
It  was  attempted  to  cover  in  these  schedules  all  currently 
quoted  standard  articles.  Modifications  in  differentials  were 
made  from  time  to  time  by  the  chairman  of  the  Committee  on" 
Steel  and  Steel  Products. 

In  the  latter  part  of  March,  191 8,  the  President  approved 
the  recommendation  of  the  Price  Fixing  Committee  of  the  War 
Industries  Board  that  the  maximum  prices  heretofore  fixed 
upon  iron  ore,  coke,  steel  and  steel  products  should  be  con- 
tinued until  July  i,  1918,  with  the  exception  of  basic  pig  iron, 
which  was  reduced  from  $33  to  $32  a  gross  ton,  and  of  scrap 
steel,  which  was  changed  from  $30  to  $29  per  gross  ton.  In 
connection  with  this  order,  it  has  been  requested  that  new 
contracts  calling  for  delivery  on  or  after  July  i  should  not 
specify  a  price  unless  coupled  with  a  clause  making  the  price 


THE    UNITED    STATES  287 

subject  to  revision  by  any  authorized  government  agency. 
This  clause  was  inserted  so  that  all  deliveries  after  July  i 
should  not  exceed  the  maximum  prices  then  in  force,  whatever 
the  date  of  the  conclusion  of  the  contract  may  have  been.^ 

On  June  21,  191 8,  the  Committee  on  Steel  and  Steel  Prod- 
ucts of  the  American  Iron  and  Steel  Institute  met  in  confer- 
ence with  the  Price  Fixing  Committee  of  the  War  Industries 
Board.  The  conference  was  called  at  the  instance  of  Chair- 
man Baruch  and  the  Director  of  Steel  Supply  Replogle  for 
the  purpose  of  obtaining  views  of  steel  men  as  to  whether 
changes  in  prices  were  desired  and,  if  so,  what  should  be  the 
character  and  the  extent  of  the  changes.-  The  principal 
topics  considered  at  this  conference  were  (i)  the  added  drain- 
age on  the  fund  of  producers  by  24  per  cent  advance  on  class 
commodity  rates,  which  was  to  take  effect  in  the  latter  part 
of  June,  and  (2)  recent  wage  advances.^ 

A  schedule  of  iron  and  steel  prices  to  remain  in  effect  until 
September  30  was  agreed  upon.  One  of  the  main  differences 
between  the  old  and  the  new  schedule  was  an  increase  in  the 
iron  ore  prices  from  $5.05  per  gross  ton  for  lower  lake  ports  to 
$5.50,  which  change  became  effective  July  i.  This  advance 
of  45  cents  per  ton  was  made  to  cover  the  increase  in  freight 
rates  from  mines  to  upper  docks  (33.6  cents)  and  such  charges 
as  spotting  cars,  switching,  etc.,  which  were  not  levied  when 
railroads  were  operated  by  private  individuals.  The  new 
agreement  provided  that  in  the  event  of  any  increase  or 
decrease  in  either  rail  or  lake  rates  the  base  prices  for  iron  ore 
were  to  be  increased  or  decreased  accordingly  on  all  deliveries 
made  during  the  continuance  of  such  increased  or  decreased 
freight  rates. 

Another  exception  to  the  schedule  previously  in  force  was 
the  discontinuance  of  Chicago  as  a  basing  point,  for  steel  bars, 
shapes  and  plates.^  This  was  due  partly  to  the  fact  that 
Chicago  mills  were  loaded  to  their  full  capacity. 

>  Official  Bulletin,  March  2-j,  1918. 
2  Iron  Age,  June  20,  1918,  p.  1612. 

'  Commercial  and  Financial  Chronicle,  June  22,  1918,  p.  2615. 
*  "Maximum  Prices  on   Iron  and  Steel   Products,"  American  Iron  and  Steel 
Institute,  November  15,  1918,  p.  14. 


288  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

Producers,  especially  merchant  furnace  operators,  who  buy 
a  large  part  of  their  ore  in  the  open  market,  were  dissatisfied 
because  the  price  of  pig  iron  was  not  raised.  Some  of  them 
claimed  that  the  costs  of  making  pig  iron  have  mounted  so 
high  as  to  leave  them  no  profit.^ 

The  conference  spent  some  time  in  discussing  Willard's  plan, 
under  which  it  was  proposed  that  the  government  should  take 
over  the  output  of  various  producers  at  cost  plus  reasonable 
profit,  pool  the  entire  production  and,  after  commandeering 
the  government's  supply,  sell  the  remainder  to  private  parties 
at  a  flat  rate.  The  argument  advanced  in  favor  of  this  pl^n 
was  that  it  would  have  enabled  the  government  to  give  small 
producers  a  fair  profit,  thus  stimulating  maximum  production 
without  adopting  at  the  same  time  a  price  that  would  yield 
exorbitant  gains  for  big  corporations.  No  action  was  taken 
on  this  plan. 

No  advance  had  been  granted  in  the  price  of  finished  steel. 
The  Iron  Age,  in  discussing  the  results  of  the  conference, 
charged  that,  though  approaching  the  conference  with  what 
was  said  to  be  open  mind,  the  War  Industries  Board  had 
practically  determined  in  advance  that  there  was  to  be  no 
increase  on  steel. ^  Mr.  Baruch  contended  that  in  all  price 
fixing  arrangements,  the  War  Industries  Board  was  in  a  posi- 
tion of  trustee  to  the  public,  that  since  the  government  was 
not  the  only  user  of  steel,  the  board  had  no  right  to  approve 
unnecessarily  high  prices,  counting  on  drastic  excess  profits 
taxes  to  reimburse  the  government  for  its  purchases. 

On  July  3  there  was  held  in  Washington  the  first  meeting  of 
representative  manufacturers  with  a  special  committee  ap- 
pointed by  the  War  Industries  Board  to  consider  prices  to  be 
fixed  for  steel  rails,  wire  rope  and  high  speed  tool  steel.  The 
manufacturers  emphasized  at  this  meeting  increased  labor 
and  material  costs  and  recent  freight  advance.  Sharp  dis- 
agreements developed  between  them  and  the  governmental 
price  fixing  committee.     Thus  while  a  price  of  $57  for  open 

1  Iron  Age,  June  27,  1918,  p.  1688. 

2  Ibid.,  p.  1687. 


THE    UNITED    STATES  289 

hearth  rails  was  asked  by  large  producers  and  $60  by  other 
interests,  the  government  proposed  a  figure  much  lower  than 
either  of  these  two.  In  the  case  ,of  high  speed  tool  steel  the 
steel  makers  declared  that  they  could  not  accept  the  cost 
figures  of  the  Federal  Trade  Commission.^ 

1  Iron  Age,  July  11,  1918,  pp.  81,  100. 


CHAPTER   IX 
Nonferrous  Metals 

Aluminum 

On  March  5,  191 8,  the  maximum  price  of  aluminum  was 
fixed  by  agreement  between  the  producers  and  the  War  Indus- 
tries Board  at  32  cents  per  pound,  f.  o.  b.  United  States  pro- 
ducing plant,  for  50  tons  and  over,  of  ingot  of  98  to  99  per 
cent.'  The  prewar  price  of  aluminum  was  19.71  cents  per 
pound  at  New  York.  The  price  dropped  to  17.59  cents  in 
July,  1914,  and  it  continued  below  the  prewar  level  throughout 
1914  and  during  the  first  part  of  1915."  War  demands  and 
interference  with  imports  led  to  a  steady  rise  in  the  price  after 
May,  1915,  a  maximum  of  64.8  cents  per  pound  having  been 
reached  in  November,  191 6;  this  represented  an  increase  of 
222  per  cent  over  the  prewar  level.  Since  that  date  the  price 
of  aluminum  has  been  in  the  main,  declining.  The  price  of 
32  cents  fixed  in  March,  1918,  was  increased  to  33  cents  in 
June.  The  increase  was  made  after  investigations  into  the 
cost  of  production  by  the  Price  Fixing  Committee  of  the  War 
Industries  Board  in  conjunction  with  the  Federal  Trade  Com- 
mission. The  new  maximum  base  price  became  effective 
June  I,  1918,  to  remain  in  force  until  September  i,  1918. 
Differentials  for  quantity  and  grade  as  well  as  differentials 
for  alloys  were  left  unchanged,  while  those  for  sheet,  rod  and 
wire  were  increased  by  approximately  12^  per  cent. 

The  producers  of  aluminum  agreed  first,  not  to  reduce  the 
wages;  second,  to  sell  aluminum  to  the  United  States  Govern- 
ment, to  the  Allied  governments  and  to  the  public  in  the 
United  States  at  the  same  price;  third,  to  take  the  necessary 
measures,  under  the  direction  of  the  War  Industries  Board, 

^  Price  Fixing  Bulletin,  No.  i,  August,  1918,  "Price  Regulations'by  Govern- 
ment Agencies." 

^  Ibid.,  "Market  Prices  of  Commodities  under  Control." 

290 


THE    UNITED    STATES  29I 

for  the  distribution  of  aluminum  to  prevent  it  from  falling 
into  the  hands  of  speculators,  and  fourth,  to  keep  up  the  pro- 
duction of  aluminum  so  as  to  insure  an  adequate  supply  for 
the  duration  of  the  war.  Similar  agreements  were  concluded 
with  producers  of  copper  and  other  nonferrous  metals. 

Copper 

The  average  price  of  copper  in  the  New  York  market  for 
the  year  just  preceding  the  war  was  15  cents  per  pound.  Due 
to  business  depression  in  the  early  part  of  1914  and  to 
shipping  difficulties  after  the  declaration  of  hostilities,  the 
price  dropped  to  11.25  cents  per  pound  in  November,  1914. 
Under  the  stimulus  of  enormous  war  orders  prices  soon 
recovered  and  began  advancing.  The  upward  movement 
received  three  temporary  setbacks,  one  in  the  latter  part  of 
1 91 5,  during  the  negotiation  in  this  country  of  the  Anglo- 
French  loan,  and  two  others  in  the  middle  and  towards  the 
end  of  1916,  due  largely  to  peace  rumors.  In  March,  1917, 
a  price  of  36.25  cents  per  pound  was  reached,  a  rise  of  142  per 
cent  above  the  prewar  rate.'  The  advance  was  checked 
through  somewhat  increased  production,  submarine  warfare 
and  anticipation  of  government  regulation. 

By  the  middle  of  March  it  was  certain  that  the  United 
States  was  going  to  declare  war  on  Germany,  and  preparations 
were  started.  On  March  23,  Mr.  Baruch,  chairman  of  the 
Committee  on  Raw  Materials,  Minerals  and  Metals  of  the 
Council  of  National  Defense,  announced  that  the  copper 
producers  agreed  to  furnish  the  government  with  45,000,000 
pounds  of  copper  at  i6|  cents  a  pound,  for  delivery  extending 
over  twelve  months  from  April  first.  This  united  action  of 
the  copper  producers  (only  one  of  the  large  companies  having 
refused  to  accept  a  share  in  this  sale)  was  intended  as  a  patri- 
otic demonstration  and  the  price  was  not  justified  on  any  eco- 
nomic principle,  since  too  large  a  proportion  of  the  nation's 
output  could  not  be  produced  for  this  sum.^ 

1  Price  Fixing  Bulletin,  No.  i,  August,  1918. 

*  L.  K.  Morse,  "The  Price  Fixing  of  Copper,"  The  Quarterly  Journal  of  Economics, 
November,  1918,  p.  88. 


292  PRICES    AND    PRICE    CONTROL    DURING    THE    WAR 

The  price  of  i6f  cents  was  the  av^erage  of  the  Anaconda  sales 
for  the  previous  ten  years,  but  it  in  no  way  reflected  the  cost 
of  production  of  copper  at  the  beginning  of  191 7.  The  first 
consequence  of  the  price  was  pubHc  criticism  that  the  copper 
producers  had  been  making  exorbitant  profits.  It  was  argued 
that  since  the  producers  agreed  to  supply  the  government  at 
i6f  cents,  they  should  be  compelled  to  sell  at  the  same  price 
to  the  Allies  and  also  to  domestic  consumers.  ^  The  buyers 
decided  to  abstain  from  purchasing.  The  price  of  copper 
began  to  decline,  reaching  by  the  end  of  April  27  cents. 

Negotiations  between  the  government  officials  and  the  pro- 
ducers were  progressing  slowly.  In  April  the  General  Muni- 
tions Board  of  the  Council  of  National  Defense  was  appointed, 
which  arranged  in  June  for  the  purchase  of  60,000,000  pounds 
of  copper  at  25  cents,  but  this  transaction  was  not  approved 
by  either  the  Secretary  of  War  or  the  Secretary  of  the  Navy. 
They  wanted  the  price  of  copper  for  government  requirements 
to  be  based  on  the  average  cost  of  production,  allowing  a  fair 
profit  to  the  producers,  both  costs  and  profits  to  be  deter- 
mined by  the  Federal  Trade  Commission.  On  June  30,  191 7, 
the  General  Munitions  Board  was  succeeded  by  the  War  In- 
dustries Board,  whose  function  it  was  to  control  the  produc- 
tion and  distribution  of  all  commodities  essential  to  the  con- 
duct of  war.  One  of  the  duties  of  the  War  Industries  Board 
was  to  fix  prices.  On  March  4,  191 8,  this  power  was  delegated 
to  a  Price  Fixing  Committee.  The  board  waited  for  the 
report  of  the  Federal  Trade  Commission,  which  was  examining 
the  producers'  books,  in  order  to  determine  the  cost  of  produc- 
tion. In  the  meantime  uncertainty  prevailed.  The  pro- 
ducers refused  Secretary  Daniel's  ofTer  of  i8f  cents  and  a 
subsequent  offer  of  22|  cents.  They  were  supplying  all 
government  requirements  without  billing  for  them.  Early 
in  September,  the  War  Industries  Board,  in  behalf  of  the 
Allies  entered  into  a  contract  for  about  77,000,000  pounds  of 
copper  at  25  cents.  The  market  price  of  copper  was  at  that 
time  about  26  cents.     On  September  21  the  War  Industries 

1  The  New  York  Evening  Post,  December  31,  1917,  p.  15. 


THE    UNITED    STATES  293 

Board  announced  that  by  agreement  with  the  producers  the 
price  of  copper  for  the  next  four  months  had  been  fixed  at 
23^  cents  per  pound,  f.  o.  b.  New  York,  this  price  to  apply  to 
everybody,  and  any  violation  of  the  agreement  to  be  followed 
by  governmental  seizure. 

This  "agreement"  ignored  contractual  arrangements  and 
all  the  other  factors  in  the  elaborate  machinery  of  the  market. 
It  became  necessary  to  immediately  create  an  agency  for  the 
control  of  distribution  of  copper.  Such  an  agency  was  or- 
ganized by  the  producers  under  the  name  of  the  Copper 
Producers'  Committee.  This  committee  was  sanctioned  by 
the  War  Industries  Board,  which  entrusted  to  it  the  manage- 
ment of  the  business. 

In  January,  1918,  conferences  with  producers  resulted  in  the 
continuance  of  the  agreed  price  until  June  i,  1918.  In  the 
latter  part  of  May  there  was  a  further  extension  to  August  15, 
to  which  the  producers  did  not  agree. ^  They  contended  that 
increased  cost  of  production  made  a  higher  price  necessary. 
On  July  2,  at  a  meeting  held  between  them  and  the  Price 
Fixing  Committee,  the  price  was  advanced  to  26  cents,  effec- 
tive immediately,  to  remain  in  force  until  November  i. 

Due  to  far-reaching  concentration  of  the  agencies  of  produc- 
tion and  distribution  of  copper,  the  price  fixing  problems  in 
this  industry  were  essentially  different  from  those  of  most 
other  important  industries  brought  under  control.  There 
were  in  191 6  in  the  United  States  348  mines  producing  copper. ^ 
Of  this  number  the  output  of  31  mines  was  more  than  85  per 
cent  of  the  total,  or,  1,711,395,262  pounds,  while  less  than 
295,000,000  pounds  were  obtained  from  the  remainder. 
Smelting  and  refining  show  still  greater  concentration;  as  to 
the  distribution  of  copper,  four  selling  agencies  handled  in  191 6 
almost  80  per  cent  of  all  the  refined  copper  sold  in  this  coun- 
try for  domestic  and  foreign  consumption.-^  The  fixing  of  the 
price  of  copper  has  been  simplified  also  by  the  fact  that  the 

1  L.  K.  Morse:  "The  Price  Fixing  of  Copper,"  The  Quarterly  Journal  of  Econom- 
ics, November,  191 8,  p.  94. 

2  Ibid.,  p.  76. 
^Ibid.,  p.  78. 


294  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

quality  of  refined  copper  is  practically  the  same  the  country 
over.  The  only  price  fixed  in  the  copper  industry  was  that 
for  refined  produce,  f.  o.  b.  New  York,  leaving  uncontrolled 
the  prices  for  all  stages  of  production  and  distribution. 

Mercury 

The  prewar  price  of  mercury,  jobbing  lots,  at  New  York, 
was  55  cents  per  pound.  An  irregular  advance  which  had 
begun  in  the  summer  of  19 14  brought  the  price  up  to  $1.85  in 
January,  1916;  it  rose  then  abruptly  to  $4.00,  at  which  level 
it  stayed  through  February  and  March,  1916.  This  extraor- 
dinary increase  of  627  per  cent  over  the  price  prevailing  before 
the  war  was  due  to  large  war  demands  and  also  to  the  fear 
that  London  would  cut  down  Spanish  exports  to  this  country. 
How^ever,  enough  quicksilver  was  shipped  to  the  United 
States  to  break  the  market.  A  sharp  decline  brought  the 
price  down  to  $2.55  in  April  and  $1.75  in  May;  the  decline 
continued  to  the  end  of  the  year,  the  price  reaching  a  level  of 
$1.05  per  pound  in  December,  1916.  Growing  demand  for 
quicksilver  for  export  led  to  a  rise  in  the  early  part  of  1917; 
the  average  price  during  the  last  three  quarters  of  that  year, 
as  well  as  during  the  first  half  of  1918,  was  about  $1.71  cents 
per  pound. ^ 

The  price  on  mercury  for  government  purchases  only  was 
set  on  April  18,  1918,  at  $105  per  flask  of  75  pounds,  for 
deliveries  at  San  Francisco  for  the  output  of  mines  in  Cali- 
fornia, Oregon  and  Nevada.  Texas  producers  were  to  be  paid 
the  same  price  for  deliveries  at  Marathon,  Texas;  75  cents 
additional  per  flask  was  allowed  for  deliveries  at  New  York. 

Nickel 

The  prewar  price  of  nickel  ingot  at  New  York  was  42.5  cents 
per  pound.  This  price  continued  through  19 14  and  until 
August,  1915,  when  the  rate  rose  to  47.5  cents  per  pound.  A 
second  rise,  this  time  to  50  cents  per  pound,  occurred  in  March, 

1  Price  Fixing  Bulletin,  No.  i,  August,  1918,  "Market  Prices  of  Commodities 
under  Control." 


THE    UNITED    STATES  295 

191 7.  Nickel  continued  to  be  sold  at  this  latter  price  until  it 
was  reduced  by  government  regulations  in  April,  1918.' 
The  comparative  steadiness  of  the  price  of  nickel  has  been  due 
to  the  fact  that  nickel  is  not  dealt  with  as  are  other  metals  in 
an  open  market,  but  is  sold  on  long  term  contracts.  On 
April  2,  1918,  the  International  Nickel  Company  agreed  with 
the  War  Industries  Board  to  supply  the  government  require- 
ments for  nickel  at  the  following  rates:  electrolytic,  40  cents 
per  pound,  shot,  38  cents  and  ingot,  35  cents.-  The  Allies 
and  the  United  States  public  were  not  considered  in  the 
agreement. 

Zinc 

The  prewar  price  of  zinc,  pig  (spelter)  Western,  for  early 
delivery  at  the  New  York  market  was  5.35  cents  per  pound. 
The  price  did  not  begin  to  rise  until  1915,  reaching  a  maximum 
of  22.5  cents  per  pound  in  June  of  that  year,  an  increase  of 
321  per  cent  above  the  prewar  level. ^  This  advance  was  due 
to  foreign  buying  and  to  a  shortage  of  zinc  early  in  191 5. 
The  consumers  soon  found  that  they  had  overbought  and  the 
price  receded  to  15  cents  in  November.  Then  a  recovery 
started.  Large  domestic  buying  and  a  temporary  shortage 
in  New  York  raised  the  price  to  21  cents  in  March,  1916. 
In  April  it  began  to  drop  again.  The  price  fell  to  about  9 
cents  in  September,  1916,  at  which  level  with  comparatively 
slight  fluctuations  it  remained  through  the  war.  In  April, 
191 7,  a  Zinc  Committee  was  formed;  it  held  some  conferences 
with  Mr.  Baruch  regarding  government  supply  and  fixing  of 
price,  but  the  situation  in  the  zinc  industry  was  such  that 
there  was  no  reason  for  governmental  regulation.  Purchases 
of  common  spelter  were  being  made  as  heretofore  on  competi- 
tive bids  and  the  results  were  satisfactory.*  A  maximum 
price  for  high  grade  zinc  was  fixed  by  agreement  between  the 
zinc  producers  and  the  War  Industries  Board  on  February  13, 

'  Price  Fixing  Bulletin,  No.  i,  August,  1918,  "Market  Prices  of  Commodities 
under  Control." 

^  Ibid.,  "Price  Regulations  by  Government  Agencies." 

3  Ibid. 

*  The  New  York  Evening  Post,  December  31,  1917,  p.  15. 

20 


296  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

1918;  at  the  same  time  prices  were  also  fixed  for  plate  and 
sheet.     The  prices  were: 

Grade  A  (f.  o.  b.  East  St.  Louis) 12  cents  per  pound 

Plate  (f.  o.  b.  East  St.  Louis) 14  cents  per  pound 

Sheet  (f.  o.  b.  East  St.  Louis) 15  cents  per  pound 

The  fixed  price  of  12  cents  became  the  market  price,  but  upon 
a  liberalization  of  the  specifications  new  competition  devel- 
oped, that  of  high  grade  zinc  refined  by  redistribution;'  the 
price  fell  below  12  cents  and  never  reached  that  figure  again. 
Of  the  nonferrous  metals,  lead,  tin  and  antimony  have  not 
come  under  price  control. 

Platinum  Metals 

The  first  statement  regarding  platinum  metals  was  issued 
by  the  Council  of  National  Defense  on  February  23,  191 8. 
The  government  took  over  the  control  of  production,  refining, 
distribution  and  use  of  crude  and  refined  platinum  for  the 
period  of  the  war.  The  control  was  entrusted  to  the  Chemical 
Division  of  the  War  Industries  Board,  which  immediately 
upon  taking  over  this  work  sent  out  to  the  industry  requests 
for  inventories  of  the  existing  stock  of  crude  and  refined 
platinum  and  platinum  iridium  alloys.  The  government 
declared  that  it  had  no  intention  of  taking  over  and  handling 
directly  the  stock  of  platinum,  but  that  it  was  in  favor  of 
permitting  shipment  by  the  producers  and  dealers  subject  to 
certain  conditions. ^ 

On  May  i,  a  requisitioning  order  was  issued  through  the 
Platinum  Section  of  the  War  Industries  Board,  commandeer- 
ing parts  of  the  supply  of  platinum,  iridium  and  palladium. 
The  prices  which  the  government  agreed  to  pay  for  these 
metals  up  to  June  30,  191 8,  were: 

Platinum $105  per  Troy  ounce 

Iridium 175  per  Troy  ounce 

Palladium 135  per  Troy  ounce 

A  number  of  other  requisitioning  orders  were  promulgated 
after  May  i.     The  orders  differed  from  one  another  in  the 

'  The  Neiv  York  Evening  Post,  December  31,  1918,  p.  18. 

2  Price  Fixing  Bulletin,  No.  7,  October,  1918,  War  Industries  Board. 


THE    UNITED    STATES  297 

extent  of  their  application.  The  first  order  applied  to  only  a 
few  of  the  holders  of  the  metal,  while  the  later  orders  embraced 
the  holdings  of  a  larger  number  of  individuals.  The  requisi- 
tioning order  of  June  21  covered  all  platinum,  iridium  or  pal- 
ladium in  the  control  of  or  produced  by  certain  firms,  except- 
ing when  such  metals  were  contained  in  articles  of  jewelry  on 
which  the  value  of  the  labor  exceeded  20  per  cent  of  the  value 
of  the  metal.  The  order  became  effective  on  June  30,  1918, 
to  continue  until  December  31,  1918.  It  did  not  change  the 
prices  established  on  May  i. 

On  July  12,  191 8,  a  request  was  sent  out  to  dealers  to  sub- 
mit inventories  covering  stocks  in  their  possession  on  the  date 
of  the  receipt  of  the  requisition  of  June  21 ;  subsequent  inven- 
tories were  to  be  provided  on  the  second  day  of  each  month 
up  to  and  including  January,  191 9;  the  inventories  covered 
stock  acquired  during  the  preceding  month.^ 

1  Price  Fixing  Bulletin,  No.  7,  October,  1918,  War  Industries  Board. 


CHAPTER   X 
Fibers  and  Textiles 

Cotton 

Upland  middling  cotton  was  selling  around  13  cents  .a 
pound  at  the  outbreak  of  the  European  warJ  Due  to  a  very 
large  crop  and  to  a  temporary  discontinuance  of  exports  the 
price  dropped  to  7.6  cents  in  November,  19 14.  The  cotton 
crop  (without  linters)  was  16,134,930  bales  in  1914  as  com- 
pared with  14,156,486  bales  In  1913  and  13,703,421  bales  in 
1 91 2.  The  total  world  production  of  cotton  In  19 14  was 
24,764,000  and  the  world  consumption,  17,046,000  bales. - 
The  output  in  191 5  was  for  the  United  States  11,191,820  bales 
(a  decline  of  about  5,000,000  bales  from  the  previous  year) 
and  for  the  world  18,559,000  bales;  the  consumption  of  cotton 
increased  In  1915  to  19,761,000  bales,  an  increase  of  2,715,000 
bales.  Cotton  in  191 5  recovered  sufficiently  to  bring  the 
price  In  this  country  up  to  about  10  cents  a  pound,  at  which 
level  it  stood  until  October,  1915,  when  it  rose  to  12.5  cents. 
The  fluctuations  in  the  price  during  the  latter  part  of  1915  and 
the  first  half  of  1916  were  insignificant.  The  small  crop  of 
1915  was  repeated  in  1916,  the  output  for  the  United  States 
having  amounted  to  11,449,930  bales  and  for  the  world  18,- 
365,000  bales.  World  consumption  rose  at  the  same  time 
from  19,761,000  in  1915  to  21,011,000  in  1916.  The  price  of 
cotton  began  to  climb  rapidly  upwards,  reaching  by  Novem- 
ber, 1916,  20  cents  a  pound.  During  the  early  months  of  1917 
cotton  was  selling  at  17.5  cents  a  pound,  but  it  went  up  to  2o| 
cents  immediately  upon  our  entry  into  the  war.  The  produc- 
tion in  1 91 7  was  again  only  11,302,000  bales  for  the  United 
States  and  17,410,000  bales  for  the  world,  with  a  consumption 

^  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918,  p.  66. 
2  The  New  York  Evening  Post,  December  31,  1918,  p.  17. 

298 


THE    UNITED    STATES  299 

equaling  20,180,000  bales.  Most  of  the  reserves  of  cotton 
from  previous  years  have  been  absorbed  and  cotton  went  up 
to  26.12  cents  in  July,  191 7,  and  to  30.6  cents  in  December, 
1917,  the  highest  selling  price  since  1869.  In  view  of  the 
government's  enormous  requirements  for  cotton,  it  was 
thought  that  it  would  fix  the  price  of  this  essential  commodity 
as  it  did  in  the  case  of  iron  and  steel,  copper  and  coal.  After 
our  entry  into  the  war,  however,  neither  raw  cotton  nor  its 
manufactures  were  included  in  the  list  of  necessities  in  the 
government's  price  fixing  and  licensing  regulations  and  no 
restrictions  were  placed  upon  trading  in  either  spot  cotton  or 
in  futures  on  the  cotton  exchanges. 

Cotton  which  in  19 14  was  the  object  of  a  government  proc- 
lamation to  the  people  of  the  country  urging  every  citizen 
who  could  do  so  to  buy  a  bale  of  it  at  10  cents  per  pound  was 
quoted  at  32.36  cents  a  pound  in  January,  1916.  On  Septem- 
ber 3  cotton  sold  on  the  New  York  market  as  high  as  385 
cents  per  pound.  This  price  was  reached  the  day  after  the 
worst  crop  condition  report  on  record  had  been  issued  by  the 
Agricultural  Bureau.  The  forecast,  notwithstanding  in- 
creased acreage  under  cotton,  which  rose  from  34,925,000  in 
1917  to  37,073,000  in  1918,  was  for  another  comparatively 
short  crop  of  some  1 1 ,000,000  bales.  A  wave  of  speculative 
buying  swept  over  the  New  Orleans  and  New  York  cotton 
exchanges.  The  \\'ar  Industrie^  Board  intervened  and  placed 
a  maximum  price  of  30  cents  a  pound  on  its  future  war  orders. 
This,  together  with  restrictions  placed  up6n  exports  to  neu- 
trals and  with  the  centralization  of  further  buying  by  the 
Allies,  checked  the  price  advance.  Cotton  fell  to  32^  cents  in 
October,  1918.  Planters  and  country  merchants  as  well  as 
factories  demanded  that  the  government  establish  a  minimum 
price  of  35  cents  per  pound  of  cotton;  planters  also  demanded 
the  closing  of  the  cotton  exchanges.  The  War  Industries 
Board  appointed  a  Committee  on  Distribution  of  Cotton  and 
on  November  13  ruled  that  short  selling  be  prohibited  on  the 
New  York  and  the  New  Orleans  exchanges.  Hedge  selling 
against  actual  cotton  was  permitted,  but  the  hedger  had  to 


300  PRICES    AND    PRICE    CONTROL   DURING   THE    WAR 

sign  an  affidavit  proving  ownership  of  the  spot  cotton  hedged 
with  sales  of  futures.  In  December,  1918,  trading  became 
once  more  unrestricted. 

The  domestic  consumption  and  the  exports  of  cotton  from 
1913-14  to  1917-18  were  as  follows: 

Consumption  Exports 

1913-14 5,626,078  9.150,801 

1914-15 5-597.362  8,544,563 

1915-16 ,... 6,397,613  6,191,110 

1916-17 6,788,505  5.739.009 

1917-18 6,591,336  4,476,124 

Wool 

The  number  of  sheep  in  the  United  States  has  been  steadily 
declining;  the  decrease  from  1900  to  1910  was  from  61,503,713 
to  52,447,861  or  14.7  per  cent.'  However,  th;^  decline  has  been 
partially  due  to  the  change  in  the  date  of  enumeration  from 
June  I  to  April  15;  many  lambs  are  born  during  the  interval, 
and  on  many  ranches  in  the  West  the  lambs  are  not  definitely 
counted  so  early  in  the  year  as  April  15.  The  census  considers 
that  should  the  enumeration  have  been  made  on  June  i  the 
number  of  spring  lambs  would  have  been  about  19,000,000 
or  20,000,000  instead  of  12,804,000,  as  reported  on  April  15. 
On  the  other  hand  the  number  of  older  sheep  would  have 
been  less  because  of  slaughter  and  death  from  other  causes, 
by  between  one  and  two  million.  In  view  of  these  considera- 
tions, it  is  probable  that  if  the  enumeration  of  1910  had  been 
made  as  of  June  i^there  would  have  been  between  56,000,000 
and  58,000,000  sheep  and  lambs  as  compared  with  61,503,713 
in  1900.  The  number  of  sheep  declined  to  49,719,000  in  1914 
and  to  48,900,000  in  1918.^  There  has  been  an  evidence  of 
decrease  not  only  in  such  States  as  Vermont,  Ohio,  Texas 
and  California,  but  even  in  the  northwestern  section  of  the 
country,  in  Idaho,  Montana  and  Wyoming,  where  many 
grazing  regions  have  been  overstocked  and  where  the  home- 
steader and  the  farmer  have  been  encroaching  more  and  more 
upon  the  ranches. 

^  Abstract  of  the  Thirteenth  Census  of  the  United  States,  p.  329. 

2  Reference  Handbook  of  Food  Statistics  in  Relation  to  the  War,  pp.  58-59. 


THE    UNITED   STATES  3OI 

For  many  years  previous  to  the  war  the  supply  of  home 
grown  wool  was  entirely  inadequate  to  meet  the  demand;  the 
United  States  has  been  importing  about  one-half  of  the  wool 
needed  in  the  production  of  textiles.^  The  importation 
reached  its  highest  level  in  1916,  when  it  rose  to  534,828,000 
pounds  as  compared  with  308,083,000  in  1915  and  247,649,000 
in  1 914;  the  domestic  production  during  these  years  was 
around  290,000,000  pounds.  Imports  declined  in  191 7  to 
372,372,000  pounds. 

The  price  of  wool  advanced  from  1914  to  1918  from  17.6 
cents  to  47.2  cents  per  pound;  at  the  end  of  191 7  it  was  58.2 
cents  per  pound.  Price  advances  of  scoured  wool  (Ohio,  fine 
fleece)  in  the  Boston  market  were-  from  57  cents  in  July, 
1914,  to  65  cents  in  July,  1915,  and  76  cents  in  July,  1916; 
the  average  prices  for  191 5  and  191 6  were  66^  cents  and  Tj\ 
cents  respectively.  A  rapid  advance  in  the  price  began  dur- 
ing the  latter  part  of  1916  and  particularly  after  the  United 
States  entered  the  war,  rising  to  Si. 695  cents  in  December, 
1917. 

When  the  price  became  stabilized  in  May,  1918,  scoured 
wool  was  selling  in  Boston  at  $1.81  cents.  The  price  of  wool 
was  established  by  the  Price  Fixing  Committee  of  the  War 
Industries  Board  after  a  number  of  conferences  with  growers 
and  dealers.  The  scoured  value  in  Boston  on  July  30,  191 7, 
was  taken  as  a  price  basis.  Prices  based  upon  this  value 
ranged  from  $1.07  a  pound  for  choice  common  and  braid  to 
$1.75  for  choice  fine  and  fine  medium  staples.  Growers  had 
agreed  to  deliver  the  clip  to  dealers  who  in  turn  had  under- 
taken to  distribute  it  upon  a  definite  compensation  according 
to  priorities  established  by  the  Priorities  Board.  The  govern- 
ment provided  that  it  was  to  have  first  call  upon  any  portion 
of  wool  it  required  and  could  allot  the  balance  to  mills  manu- 
facturing for  civilian  needs.  Dealers  were  permitted  to  make 
a  charge  of  3  per  cent  of  the  selling  price  if  the  wool  was  not 
graded,  and  3I  per  cent  if  graded.     This  commission  covered 

^  Yearbook  of  the  Department  of  Agriculture,  1916,  p.  30. 

*  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918,  p.  72. 


302       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

all  storage,  cartage  and  insurance,  and  was  to  be  added  to 
the  price  of  the  wool  as  it  left  the  dealer's  hands.  Dealers  in 
wool  were  to  be  approved  by  the  War  Industries  Board  and 
no  one  not  approved  was  allowed  to  buy. 

Wool  growers,  wool  dealers  and  woolen  manufacturers  were 
represented  on  a  government  committee  which  took  charge  of 
the  details  of  operation  of  the  order. 

The  government  took  over  the  entire  domestic  supply  of 
wool  and  also  bought  a  considerable  quantity  of  imported 
wool  which  it  was  able  to  secure  from  the  British  Government 
at  lower  prices  than  those  at  which  it  bought  the  domestic 
material.  Much  the  larger  proportion  of  the  supply  bought 
by  the  government  was  apportioned  among  its  clothing  con- 
tractors, the  remainder,  especially  such  grades  as  were  not 
suitable  for  government  needs,  being  sold  to*those  who  were 
manufacturing  for  civilian  use.  At  the  unexpectedly  early 
close  of  hostilities,  the  government  found  itself  in  possession 
of  a  large  supply  of  wool  for  which  it  had  no  further  use.^ 

Textiles 

The  price  of  cotton  yarns  dropped  from  an  average  of  22 
cents  a  pound  from  July  i,  1913,  to  June  30,  1914.  to  a  little 
over  16  cents  during  the  last  quarter  of  1914.'  The  lowest 
level  was  reached  in  March,  1915,  when  cotton  yarn  was  selling 
at  14.5  cents  a  pound.  The  average  for  191 5  was  \']\  cents. 
A  reaction  against  low  prices  set  in  during  the  latter  part  of 
that  year  and  the  price  rose  from  17  cents  in  September,  1915, 
to  21  cents  in  December.  There  was  an  almost  uninterrupted 
advance  through  191 6,  which  brought  the  price  up  to  38I 
cents  a  pound  in  December,  191 6.  After  a  slight  fall  at  the 
beginning  of  191 7  prices  started  once  more  to  advance,  cotton 
yarn  being  quoted  at  63  cents  a  pound  during  the  second  and 
third  quarters  of  1918. 

1  F.  W.  Taussig:  "Price  Fixing  as  Seen  by  a  Price  Fixer,"  Quarterly  Journal  of 
Economics,  F-ebruary,  1918,  p.  213. 

2  War  Industries   Board,   "Monthly  Fluctuations  of   Prices  under  Control," 
November,  1918,  p.  67. 


36" 

48x48 

3.00  yd. 

36" 

56  X  60 

4.00  yd. 

2>H" 

64  X  60 

5-35  yd. 

38r' 

80x80 

4.00  yd. 

THE   UNITED    STATES  303 

The  fluctuations  In  the  price  of  print  cloths  followed  those 
of  cotton  yarns.  The  price  rose  from  its  low  level  of  2.44 
cents  a  yard  In  December,  1914,  to  3.2  cents  In  December, 
19 1 5,  and  to  5.4  cents  In  December,  1916.  The  feverish  buy- 
ing of  1 91 7  advanced  the  price  to  8^  cents  by  December  of 
that  year.  The  highest  level  was  reached  in  April,  191 8, 
when  print  cloths  sold  at  13.06  cents  a  yard. 

The  control  of  prices  of  cotton  goods  began  on  June  8,  1918, 
when  the  War  Industries  Board  upon  consultation  with  the 
cotton  manufacturers  established  the  following  net  maximum 
prices  on  mill  on  basic  cotton  products: 

sheeting  60  c.  per  lb. 

sheeting  70  c.  per  lb. 

print  cloth  83  c.  per  lb. 

print  cloth  84  c.  per  lb. 

Standard  wide  and  sail  duck,  37^  per  cent  and  5  per  cent  from  list. 
Standard  army  duck,  33  per  cent  from  list. 

These  prices  took  effect  on  July  i,  1918,  and  were  to  remain 
in  force  until  October  i,  the  terminal  date  later  being  changed 
to  November  16.  They  represented  a  reduction  from  quoted 
market  prices  of  about  20  per  cent  to  30  per  cent  and  applied 
to  all  primary  civilian  purchases  as  well  as  to  the  purchases  of 
our  government  and  of  the  governments  of  those  countries 
which  were  associated  with  us  in  the  war.' 

In  accordance  with  the  agreement  between  the  representa- 
tives of  the  cotton  manufacturing  Industry  and  the  War 
Industries  Board,  various  differentials  were  fixed  at  different 
dates  for  a  full  line  of  cotton  fabrics.  They  were  based  on 
rather  inadequate  Information  and  the  Federal  Trade  Com- 
mission was  entrusted  with  the  task  of  collecting  and  analyzing 
the  cost  of  production  data,  for  the  purpose  of  permitting  the 
government  to  know  the  situation  better  before  entering  Into 
subsequent  agreements.  Besides  cotton  fabrics  and  wool,  the 
following  fibers  and  textiles  were  brought  under  control: 
binder  twine,  manlla  fiber  and  rags. 

^  Price  Fixing  Bulletin,  Xo.  8,  Division  of  Planning  and  Statistics,  War  Indus- 
tries Board. 


CHAPTER   XI 

Miscellaneous  Products 

Chemicals 
Wood  Alcohol 

Wood  alcohol  was  selling  at  25  cents  a  gallon  between  July, 
1913,  and  October,  1915.  By  November,  1915,  it  began  to  be 
used  for  direct  war  purposes  and  its  price  rose  to  about  30 
cents  a  gallon.  Because  of  large  export  requirements,  the 
price  continued  to  advance  all  through  1916,  reaching  50 
cents  a  gallon  in  November  and  60  cents  in  December  of 
that  year.  In  191 7,  the  demand  was  greatly  increased  by 
our  own  military  requirements  and  the  price  advanced  still 
further.  It  reached  70  cents  in  March,  at  which  figure  it 
stood  until  a  new  rise  brought  it  up  to  90  cents  in  November 
and  December,  1917.^ 

In  the  latter  month  the  price  of  wood  alcohol  was  fixed  by 
an  order  of  the  War  Industries  Board.  This  order,  issued  on 
December  24,  191 7,  commandeered  all  wood  chemicals  for  a 
period  of  six  months. ^  It  was  renewed  in  July  for  another 
six  months.  The  price  of  wood  alcohol  was  fixed  at  50  cents 
a  gallon,  f.  o.  b.  shipping  point.  Some  of  the  other  wood 
chemicals  which  were  commandeered  in  December,  1917, 
were:  acetate  of  lime,  acetic  acid,  refined  alcohol,  pure 
methyl  alcohol  and  formaldehyde. 

Acetate  of  Lime 

Acetate  of  lime  commenced  to  rise  in  price  somewhat 
earlier  than  wood  alcohol.  After  October,  1914,  the  usual 
demands  were  enormously  increased  by  orders  from  Europe 
and  the  price  advanced  sharply,  rising  from  $1.52  per  100 

1  War  Industries  Board,  "Market  Prices  of  Commodities  under  Control — 
Chemicals." 

^  War  Industries  Board,  "Price  Regulation  by  Government  Agencies — Chemi- 
cals and  Explosives." 

304 


THE    UNITED    STATES  305 

pounds  in  October,  1914,  to  $4.03  in  October  of  the  fol- 
lowing year,  and  to  $7.03  in  February,  1916,  which  was  the 
highest  level  it  reached  during  the  war.  In  October,  191 7,  a 
reaction  set  in,  largely  due  to  heavy  overbuying  in  the  pre- 
vious year,  the  price  dropping  to  $3.53  per  100  pounds. 
An  upward  movement  set  in  again  after  our  own  entry  into 
the  war,  the  price  rising  to  $6.03  in  October,  1917.  In 
December  the  industry  passed  under  the  control  of  the  gov- 
ernment, which  commandeered  this  chemical  at  4  cents  a 
pound. 

Ammonia 

Until  May,  19 16,  the  supply  of  ammonia  was  sufficient  to 
meet  all  demands  and  the  price  remained  at  its  prewar  level 
of  3.38  cents  a  pound.  The  price  gradually  advanced  to  4.5 
cents  by  June,  191 6,  but  did  not  begin  to  rise  rapidly  until 
our  own  entry  into  the  war.  The  increased  use  of  ammonium 
nitrate  as  an  explosive  added  greatly  to  the  demand  for 
ammonia  and  led  to  an  accelerated  upward  course,  ammonia 
selling  at  13.25  cents  a  pound  in  November,  191 7,  when  the 
Food  Administration  fixed  a  maximum  price  of  8j  cents  per 
pound,  carload  lots.  Ammonia  was  the  only  chemical  whose 
price  was  fixed  by  the  Food  Administration.  The  Adminis- 
tration undertook  also  to  allocate  the  output. 

Nitric  Acid 

The  price  of  nitric  acid  remained  stationary  until  July, 
1 915.  By  that  time  the  large  contracts  for  explosives  from 
the  Allied  governments  created  a  demand  for  nitric  acid  far  in 
excess  of  the  available  supply.  Prices  rose  to  8.9  cents  in 
September,  1916,  and  remained  at  this  level  until  June,  1916, 
when  a  decline  set  in  which  brought  the  price  down  to  6.3 
cents  in  January,  191 7.  Heavily  increased  production,  which 
developed  under  the  stimulus  of  high  prices  and  large  profits, 
accounts  for  the  decline.  It  was,  however,  only  temporary. 
Our  own  war  needs  led  to  a  new  advance,  the  price  having 
risen  in  191 7  and  in  191 8  to  even  higher  levels  than  in  191 6. 
In  October,  191 7,  nitric  acid  was  quoted  at  9.45  cents  a  pound 


306  PRICES   AND   PRICE   CONTROL   DURING   THE    WAR 

and  in  June,  191 8,  at  9.63  cents.  It  was  during  the  latter 
month  that  the  War  Industries  Board  fixed  the  maximum 
price  at  8|  cents  per  pound  to  government  and  pubHc. 

Nitrate  of  Soda 

Practically  all  the  world's  supply  of  nitrate  of  soda  comes 
from  Chile.  During  the  early  months  of  the  war,  because  of 
the  shutting  off  of  the  German  market,  which  normally  had 
consumed  about  one-third  of  the  Chilean  output,  and  because 
of  the  swamping  of  other  countries  by  extra  cargoes  diverted 
to  their  ports,  prices  fell  from  a  comparatively  low  average 
of  $2.52  for  1913  to  $1.90  cents  in  November,  1914.  More 
than  half  of  the  nitrate  plants  in  Chile  were  forced  to  shut 
down.  The  depression  continued  until  April,  1915,  when  the 
demand  for  nitrate  in  the  manufacture  of  explosives  began 
to  be  felt.  The  price  rose  to  $2.90  in  December,  1915,  and  to 
$3.60  in  March,  191 6.  High  prices  stimulated  production  and 
led  to  an  enormously  increased  output.  The  price  fell  grad- 
ually, reaching  $2.90  by  October,  1916.  An  increased  demand 
both  for  explosives  and  fertilizer,  combined  with  the  shortage 
of  ocean  tonnage,  started  the  price  once  more  on  its  upward 
movement.  It  went  up  to  $4.73  in  October,  191 7,  when,  in 
order  to  curtail  speculation,  a  government  central  purchasing 
board  was  appointed.  Since  January,  191 8,  the  determination 
of  the  uniform  price,  as  well  as  the  control  of  the  distribution 
of  nitrate  of  soda,  was  placed  in  the  hands  of  the  Nitrate 
Committee.  The  price  to  importers  in  the  United  States  was 
based  on  the  average  monthly  cost  in  Chile  and  to  this  aver- 
age price  was  added  a  fixed  charge  of  2.5  per  cent  of  landed 
costs  in  this  country  as  a  brokerage  charge;  This  meant  a 
price  of  $4.23  per  hundredweight  of  95  per  cent  nitrate 
up  to  the  month  of  June,  when  it  was  reduced  to  $4.05.  In 
July  it  was  raised  to  $4.10  and  in  August  to  $4.30!. 

Sulphuric  Acid 

There  was  a  steady  increase  in  the  supply  of  sulphuric  acid 
during  1913  and  1914,  and  the  demand,  which  under  normal 


THE    UNITED    STATES  307 

conditions  comes  chiefly  from  the  fertihzer  industry,  was  not 
sufficient  to  absorb  the  large  output;  the  situation  became 
so  acute  by  January,  191 5,  that  many  plants  reduced  their 
operations  and  some  shut  down  entirely.  Sulphuric  acid 
was  selling  at  one  cent  a  pound,  with  few  opportunities  to  sell 
even  at  that  price.  Then  came  a  demand  for  sulphuric  acid 
in  the  manufacture  of  munitions  and  by  the  summer  of  1915 
this  demand  became  so  insistent  that  a  feverish  productive 
activity  developed.  The  supply,  however,  was  not  sufficient 
to  meet  the  requirements  and  the  price  soared.  Sulphuric  acid 
which  for  two  years  and  a  half  went  begging  at  i  cent  a  pound 
rose  to  1.75  cents  in  September,  1915,  to  2  cents  in  January, 
1916,  and  to  2.5  cents  in  February  of  the  same  year.  By 
August,  1916,  the  price  fell  to  1.5  cents,  around  which  figure 
it  fluctuated  through  the  latter  part  of  1916  and  the  early 
part  of  191 7.  Because  of  expansion  of  war  requirements,  an 
upward  movement  began  in  July,  191 7,  the  price  rising  to  2| 
cents  by  March,  1918.  In  June,  1918,  the  War  Industries 
Board  fixed  a  maximum  price  on  sulphuric  acid  effective  for 
a  period  of  three  months.  It  was  $28  per  ton  of  2,000  pounds, 
f.  o.  b.  works  in  sellers'  tank  cars. 

Hides  and  Leather 

The  price  of  packers'  heavy  hides  (native  steers)  rose  from 
19.4  cents  per  pound  in  July,  1914,  to  25.8  cents  in  July, 
1 91 5.'  The  increase  during  the  following  year  was  not  very 
pronounced,  the  price  having  advanced  only  1.2  cents  by 
July,  1 91 6.  Prices  began  to  climb  upwards  more  rapidly 
during  the  latter  part  of  1916  and  in  January,  1917,  hides 
were  selling  at  33.5  cents  a  pound.  At  the  time  of  the 
entry  of  the  United  States  into  war  the  price  was  30.5  cents, 
rising  again  to  the  January  rate  during  the  subsequent 
months.  New  high  levels  were  reached  in  November  and 
December,  191 7,  when  hides  were  selling  around  35  cents  a 
pound.  The  price  dropped  to  about  32.8  cents  in  January 
and  to  26.25  cents  in  March,  191 8.     Hides  were  being  quoted 

*  Monthly  Review  of  the  U.  S.  Bureau  of  Labor  Statistics,  February,  1918,  p.  103. 


308  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

at  32.4  cents  when  the  government  in  agreement  with  the 
hide  Interests  stabiHzed  the  price  on  July  19  (to  become 
effective  August  i)  at  30  cents  a  pound. ^ 

Differential  prices  were  fixed  for  different  grades  of  hides 
and  all  hides  were  to  be  bought  and  sold  on  a  selected  basis, 
according  to  rules  issued  by  the  Hide  and  Skin  and  Tanning 
Material  Section  of  the  War  Industries  Board. 

The  prices  of  sole  leather  (oak)  did  not  follow  the  fluctua- 
tions in  the  price  of  hides.  While  the  latter  advanced  from 
July,  1914,  to  July,  1915,  6.5  cents,  the  leather  went  up  only 
2  cents  (from  47.5  cents  to  49.5  cents  a  pound).  The  advance 
from  July,  1915,  to  July,  1916,  was  entirely  out  of  proportion 
to  the  increase  in  the  price  of  hides,  the  latter  rising  only  1.2 
cents,  while  leather  advanced  14  cents  (from  49.5  cents  to 
63.5  cents  a  pound),  selling  in  July,  1917,  at  81.5  cents  a 
pound  and  in  July,  191 8,  at  83  cents. ^  Imported  sole  leather 
(hemlock — Buenos  Ayres  and  Montevideo)  was  quoted  during 
1914  and  1915  at  between  29.5  cents  (August,  1914)  and  32.5 
cents  (January,  1915).^  The  rise  during  the  first  half  of  1916 
brought  the  price  up  to  37  cents,  at  which  figure  it  stood 
from  May  to  September,  a  rapid  advance  occurring  after  this 
date,  which  brought  the  price  up  to  57  cents  in  December, 
1916.  The  highest  figure  was  reached  in  March,  1917,  when 
imported  leather  was  selling  at  59.5  cents,  the  average  for 
the  year  being  53.54  cents.  At  the  beginning  of  1918  the 
price  was  49  cents  a  pound,  and  it  was  this  price  that  ruled 
through  1 91 8,  with  the  exception  of  the  months  of  March  and 
April,  when  leather  was  quoted  at  45.5  cents. 

Following  its  action  in  fixing  maximum  prices  on  hides  and 
skins,  the  War  Industries  Board,  in  agreement  with  the  sole 
leather  group  of  the  Tanners'  Council,  established  a  schedule 
of  maximum  prices  for  sole  and  belting  leather  to  become 
effective  on  August  9, 1918.    In  conformity  with  the  usual  prac- 

1  Monthly  Labor  Review,  December,  1918,  p.  11 1;  War  Industries  Board,  Bulle- 
tin of  Monthly  Prices  during  the  War,  November,  1918,  p.  65. 

^  Monthly  Labor  Review,  May,  1919,  p.  145. 

^  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918,  p.  68. 


THE    UNITED    STATES  309 

tice,  the  prices  were  to  hold  for  three  months.  They  varied 
from  34  cents  for  Buffalo  dry  hide  overweight  to  96  cents 
for  best  grade  heavy  packer  oak  belting  butts.  It  was  espe- 
cially stated  that  maximum  prices  did  not  mean  fixed  prices 
and  that  it  was  anticipated  that  within  the  maximum  prices 
the  laws  of  supply  and  demand  would  have  their  influence. 

On  August  14  the  War  Industries  Board  informed  the  tan- 
ners of  upper  leather  that  it  Mould  insist  on  its  ruling  that  the 
only  permissible  colors  for  the  tanners  to  make  and  shoe 
manufacturers  to  cut  after  October  i  were  black,  medium 
dark  shade  of  brown  and  tan. 

Rubber 

Rubber  is  one  of  a  very  few  commodities  whose  price  has 
not  been  to  any  considerable  degree  affected  by  the  war. 
Enormous  growth  of  the  rubber  plantation  industry  during 
the  last  few  years,  the  falling  off  of  rubber  imports  into 
Germany  and  the  character  of  the  War  Trade  Board  rubber 
allocations  were  some  of  the  factors  responsible  for  this 
phenomenon.'  The  low  level  of  Brazilian  (wild)  and  Cey- 
lon (plantation)  rubber  prices  running  throughout  the  period 
of  the  war  has  been  broken  by  violent  rises  only  three  times. 
The  first  important  advance  was  that  of  plantation  rubber  in 
the  latterpart  of  1914,  which  was  due  to  Great  Britain's  declar- 
ing rubber  as  contraband  of  war  in  October  of  that  year  and 
to  the  establishment  in  November  of  an  embargo  on  rubber 
shipments  from  any  English  ports.  The  price  of  Ceylon  rub- 
ber rose  from  56.5  cents  per  pound  in  August  to  74.5  cents  in 
December,  1914,  and  to  81  cents  in  January,  1915.  When  the 
embargo  was  lifted  for  the  United  States  in  January,  1915, 
the  price  fell  back  to  about  63  cents  a  pound.  The  next  ad- 
vance, both  for  Para  and  Ceylon  variety,  occurred  in  the 
latter  part  of  191 5  and  the  early  part  of  191 6,  the  highest 
level  being  reached  in  January,  when  the  price  was  $1.05  a 
pound  for  Ceylon  and  $1.00  for  Para.     This  rise  as  well  as  the 

*  War  Industries  Board,  Price  Fixing  Bulletin,  No.  2,  August,  1918. 


3IO  PRICES   AND    PRICE    CONTROL    DURING   THE    WAR 

one  at  the  beginning  of  191 7  was  due  largely  to  the  activities 
of  German  submarines. 

The  first  fixed  prices  of  rubber  became  effective  on  May  i, 
1 91 8.  They  included  only  three  grades  of  rubber,  one  Para 
and  two  plantation  grades,  the  price  for  the  first,  upriver,  fine, 
being  fixed  at  68  cents  per  pound  and  the  prices  for  the  latter 
at  63  and  62  cents. ^  This  short  schedule  was  followed  on 
jVIay  14,  1918,  by  a  much  longer  one,  embracing  various 
plantation  qualities,  Mexican  guayule,  Para  grades.  Central 
American  and  African  grades,  Balata,  Gutta  Percha  and 
many  others.  The  lowest  fixed  price  was  14  cents  per  pound 
for  Sarawak  grade  of  Gutta  Joolatang  (Pontianac),  the  high- 
est for  Red  Macassan  Gutta  Percha — $3.00  per  pound. 
Supplementary  lists  of  prices  were  issued  on  May  29,  June 
13.  July  2  and  July  6,  1918.  All  prices  were  on  the  basis  of 
c.  i.  f.  New  York. 

The  fixing  of  rubber  prices,  as  well  as  the  promulgation  of 
certain  rules  and  regulations  to  govern  the  rubber  industry, 
was  made  necessary  by  the  inclusion  of  crude  rubber  in  the 
list  of  commodities  whose  importation  into  the  United  States 
was  limited  from  April  30,  1918,  until  further  notice.  This 
limitation  of  imports  was  resorted  to  in  order  to  release  every 
possible  ship  for  transatlantic  uses.  The  War  Trade  Board 
feared  that  it  would  invite  hoarding,  speculative  dealing  and 
profiteering,  hence  the  fixing  of  prices  and  the  option  granted 
to  the  United  States  Government  to  purchase  all  or  any  part 
of  the  crude  rubber  at  optional  prices.  The  rubber  importers 
were  not  to  sell,  transfer  or  deliver  rubber  at  prices  greater 
than  those  set  forth  in  the  government  option,  except  such 
rubber  as  they  may  have  been  under  an  obligation  to  deliver 
under  a  contract  executed  and  in  force  prior  to  May  i,  1918.2 
The  War  Trade  Board  restrictions  permitted  the  licensing 
of  rubber  importations  at  the  rate  of  100,000  long  tons  per 
year,  the  amount  imported  in  191 7  being  181,088  long  tons. 
The  cut  in  the  rubber  imports  into  the  United  States  led  to 

1  War  Industries  Board,  Price  Fixing  Bulletin,  No.  2,  August,  IQ18. 

2  Ibid. 


THE   UNITED    STATES  3II 

the  fall  of  prices  in  the  primary  markets  where  the  production 
was  considerably  in  excess  of  the  amounts  allocated  for  ship- 
ments to  this  country.  The  maximum  prices  fixed  for  rubber 
represented  one  of  the  few  examples  of  fixed  prices  which  were 
well  above  the  market  quotations. 

Laggings  below  the  maximum  prices  occurred  also  in  zinc 
and  lumber. 

Lumber 

Not  only  were  there  no  important  advances  in  the  price  of 
lumber  during  1914  and  191 5,  but  in  the  case  of  some  varieties, 
such  as  hemlock,  gum,  yellow  pine,  the  price  declined  slightly 
from  what  it  had  been  just  before  the  declaration  of  war. 
The  advance  in  price  commenced  in  the  latter  part  of  1916, 
especially  for  varieties  demanded  for  war  purposes,  Douglas 
fir  rising  from  $7.50  per  one  thousand  feet  in  August  to  $9.50 
in  December.'  The  average  price  of  Douglas  fir  for  191 7  was 
$10.38;  it  began  to  rise  more  rapidly  after  the  LInited  States 
entered  the  war,  the  quotation  reaching  $18.50  in  June,  1917. 
The  price  of  yellow  pine  rose  from  an  average  of  $10.00  per 
one  thousand  board  feet  in  the  first  quarter  of  19 14  to  $30.00 
in  the  second  quarter  and  $35.00  in  the  third  quarter  of  1917.^ 
Beginning  with  December,  191 7,  f.  o.  b.  mills  price  was  estab- 
lished for  Douglas  fir.  It  was  a  fixed  price  to  the  government 
only.  On  June  15,  1918,  maximum  prices  were  fixed  to  apply 
to  the  government,  to  the  Allied  governments  and  to  the 
public.^  Only  sales  by  manufacturers  were  regulated.  The 
United  States  Government  had  the  option  on  all  contracts 
and  the  War  Industries  Board  could  allocate  the  lumber  either 
to  the  government  or  to  other  essential  users.  The  balance 
was  released  for  sale  to  commercial  buyers. 

According  to  regulations,  wages  and  labor  conditions  in 
force  were  to  remain  unchanged  and  contracts  entered  into  in 
good  faith  previous  to  the  promulgation  of  the  order  were 

1  War  Industries  Board,  Bulletin  of  Monthly  Prices  during  the  War,  November, 
1918,  p. 104. 

2  Ibid.,  p.  109. 

MVar  Industries  Board,  "  Price  Regulations  by  Government  Agencies — Lumber 
and  Building  Materials." 

21 


312  PRICES   AND    PRICE    CONTROL   DURING   THE   WAR 

to  be  performed  in  accordance  with  their  terms,  subject  to 
government  priority  orders.  Maximum  prices  on  Douglas  fir 
ranged  from  $12  per  thousand  for  No.  3  to  $20  per  thousand 
for  No.  I . 

On  January  28,  191 8,  maximum  prices  to  the  United  States 
and  the  Allied  governments  were  fixed  on  southern  or  yellow 
pine  and  somewhat  later,  in  April,  1918,  North  Carolina  pine 
and  New  England  spruce  also  came  under  regulation.  In 
June,  1918,  the  prices  on  these  varieties  of  lumber  were  raised, 
the  increase  in  the  case  of  yellow  pine  lumber  being  about 
$4.80  per  thousand  over  the  former  government  list  prices. 
The  new  prices  were  approximately  the  same  as  those  ruling 
on  the  market  at  the  time  of  their  establishment.  The  max- 
imum price  of  Pennsylvania  hemlock  was  fixed  in  April,  1918. 
The  price  fixing  agencies  for  lumber  besides  the  War  Indus- 
tries Board  were  the  North  Carolina  Emergency  Bureau  for 
North  Carolina  pine,  the  Southern  Pine  Emergency  Bureau 
and  Alabama  and  Mississippi  Emergency  Bureau  for  south- 
ern or  yellow  pine  and  the  New  England  Spruce  Emergency 
Bureau  for  New  England  spruce.  When  spruce  for  aeroplanes 
became  one  of  the  most  necessary  things,  the  United  States 
Spruce  Production  Corporation  was  formed,  particularly  for 
the  purpose  of  getting  out  spruce  from  the  Pacific  northwest. 

There  was  a  demand  on  the  part  of  producers  for  an  ad- 
vance of  the  maximum  prices  beyond  those  established  by 
the  government.  This  demand  was  not  heeded  even  though 
the  producers  were  able  to  show  a  rise  in  their  costs  of  produc- 
tion. The  maintenance  of  the  unchanged  maximum  was 
announced  to  rest  on  the  ground  that  the  output  heretofore 
maintained  was  no  longer  needed  and  that  the  industry  should 
be  confined  to  military  and  essential.^ 

Building  Materials  (Other  than  Lumber) 

It  is  a  difficult  matter  to  standardize  building  materials 
by  kinds  and  to  show  by  representative  quotations  the  state 

^  F.  W.  Taussig:  "Price  Fixing  as  Seen  by  a  Price  Fixer,"  Quarterly  Journal  of 
Economics,  February,  1918,  p.  229. 


THE    UNITED    STATES  313 

of  trade  in  these  materials  as  a  whole.  There  are  too  many 
variations  in  quality  and  the  character  of  the  products  makes 
their  prices  more  subject  to  local  conditions  than  are  the  prices 
of  most  other  commodities.  This  is  due  particularly  to  the 
cost  of  transporting  building  materials  to  central  markets.' 
In  order  to  make  possible  a  comparison  of  the  general  rise  of 
building  materials  (other  than  lumber)  with  other  groups  of 
commodities,  an  index  has  been  constructed  by  the  Price 
Section  of  the  War  Industries  Board  showing  the  movement 
of  the  prices  of  brick,  cement,  glass,  gravel,  lime,  paint  mate- 
rials, putty,  rosin,  sandstone  and  tar  for  the  period  Jan- 
uary, 1913,  to  date.  The  price  of  "Building  Materials,"  as 
shown  by  this  index  number,  has  lagged  behind  the  prices  of 
"Food,"  "Metals  and  Metal  Products"  and  "All  Commodi- 
ties." Thus  while  in  the  last  quarter  of  1916  "Food"  in- 
creased 44  per  cent,  "Metals  and  Metal  Products"  77  per 
cent,  and  "All  Commodities"  41  per  cent,  the  "Building 
Materials,"  index  number  showed  an  increase  over  the  pre- 
war base  of  only  21  per  cent.  The  general  rise  in  the  price 
of  "Food"  and  that  in  "All  Commodities"  was  about  twice, 
the  rise  in  the  "Metals  and  Metal  Products"  group  four 
times  as  great  as  that  in  the  "Building  Materials"  group. 
This  same  relation  continued  in  191 7.  In  the  last  quarter  of 
1917,  "  Food"  was  83  per  cent  above  its  prewar  base,  "  Metals 
and  Metal  Products,"  88  per  cent,  "All  Commodities"  81 
per  cent,  while  "Building  Materials"  were  only  about  40 
per  cent.  The  rise  after  January,  191 8,  was  relatively  greater 
for  "Building  Materials"  than  for  other  groups,  so  that  by 
October,  191 8,  it  represented  an  89  per  cent  increase  above  the 
prewar  level,  as  compared  with  91  per  cent  for  "Foods," 
96  per  cent  for  "Metals  and  Metal  Products"  and  103  for 
"All  Commodities." 

The  rise  in  the  prices  of  building  materials  (other  than 
lumber)  may  be  attributed  mainly  to  an  advance  in  costs 
and  not  to  an  increase  in  demand.  Building  operations  in 
191 5  were  10  per  cent  above  the  prewar  average,  in  191 6, 

1  Price  Fixing  Bulletin,  No.  6,  November,  1918,  p.  i. 


314  PRICES   AND    PRICE    CONTROL   DURING   THE    WAR 

they  were  35  per  cent  above  this  average  and  in  191 7,  38  per 
cent  below.  ^ 

By  September,  1918,  prices  were  fixed  on  Portland  cement, 
building  tile,  sand  and  gravel. ^  At  the  time  of  the  fixing  of 
the  price  of  cement,  in  May,  191 8,  it  was  selling  at  $2.56 
a  barrel.  New  York  market,  or  62  per  cent  above  the  prewar 
figure  of  $1.58.  Fixed  prices,  to  remain  in  force  until  August 
31,  1 91 8,  applied  to  the  purchases  by  the  United  States  Gov- 
ernment only,  and  ranged  from  $1.60,  f.  o.  b.  plant  location 
for  Bufiington,  Indiana,  cement  to  $2.00  for  the  Oswego, 
Oregon,  product.  In  the  open  market  prices  continued  to  rise, 
reaching  $2.90  a  barrel  in  September,  191 8.  A  slightly  modi- 
fied schedule  was  adopted  by  the  Price  Fixing  Committee  of 
the  War  Industries  Board  on  August  23,  1918,  after  its  con- 
sultation with  the  War  Service  Committee  of  the  industry. 
The  revised  schedule,  which  reduced  prices  by  three  cents  a 
barrel,  went  into  effect  in  September,  to  remain  in  force  for 
four  months. 

Prices  for  building  tile  were  fixed  on  July  25,  1918,  on  the 
basis  of  prices  charged  prior  to  July  i  of  that  year.  As  in  the 
case  of  cement  they  applied  to  government  purchases  only. 
No  definite  date  was  set  during  which  they  were  to  remain  in 
effect. 

Prices  on  sand,  gravel  and  crushed  stone  were  fixed,  to  the 
government  only,  on  July  10,  191 8,  to  be  effective  for  the 
period  ending  October  31,  1918. 

Sand $0.75  per  ton 

Gravel i .  60  per  ton 

Crushed  stone 1.85  per  ton 

These  prices  were  for  full  scowload  lots  delivered  f.  o.  b.  scow, 
within  the  lighterage  limits  of  the  port  of  New  York.  For 
deliveries  made  outside  of  these  limits  the  extra  cost  of  towage 
could  be  added  to  the  price.  On  August  28,  the  Price  Fixing 
Committee  established  prices  for  the  States  of  New  Jersey, 
Delaware  and  Pennsylvania  east  of  and  including  Harrisburg. 

'■  Price  Fixing  Bulletin,  No.  6,  November,  1918,  p.  i. 
^  Ibid.,  No.  5,  September,  1918. 


THE   UNITED    STATES  315 

These  prices  were,  for  deliveries  in  full  scowload  lots,  f.  o.  b. 
scow : 

Sand $0 .  60  per  ton 

Gravel i .  00  per  ton 

Crushed  gravel i  .  25  per  ton 

The  government  fixed  the  price  of  sand  because  in  certain 
localities  it  was  engaged,  directly  or  through  contractors,  in 
dock  and  harbor  operations  and  was  therefore  the  purchaser 
of  all  the  available  sand  and  gravel  in  the  vicinity. 

Newsprint  Paper 

The  rise  in  the  price  of  newsprint  paper  since  the  outbreak 
of  the  war  has  been  so  great  that  on  April  24,  191 6,  a  resolu- 
tion was  passed  in  the  United  States  Senate  requesting  the 
Federal  Trade  Commission  to  investigate  the  newsprint  paper 
industry  of  the  country.  The  commission  in  a  letter  dated 
June  13,  1 91 7,  to  the  President  of  the  Senate,  recommended 
governmental  control  of  the  production  of  print  and  book 
paper.  It  found  that  for  the  second  half  of  1916  the 
prices  for  print  and  book  paper  were  from  65  to  84  per  cent 
higher  than  in  191 5  and  that  the  average  profits  of  41  of  the 
book  making  paper  mills  for  1916  were  100  per  cent  more  than 
for  the  previous  year.^  The  increase  in  the  price  from  191 6 
to  191 7  was  about  50  per  cent.  In  consequence  of  the  report 
of  the  Federal  Trade  Commission  suit  was  brought  by  the 
Attorney  General  against  the  News  Print  Manufacturers 
Association,  the  so-called  paper  trust.  Many  members  of 
this  association  were  indicted  for  combination  and  contracts 
in  restraint  of  trade. 

On  August  30,  191 7,  the  President,  under  his  authority  to 
control  the  price  of  commodities  purchased  by  the  govern- 
ment, fixed  the  price  of  print  paper  for  the  Official  Bulletin 
at  2^  cents  a  pound.  Previous  to  this,  in  February,  191 7, 
certain  manufacturers  requested  the  Federal  Trade  Com- 
mission to  fix  "a  fair  and  reasonable  price  for  the  sale  of 
newsprint  paper  for  use  in  the  United  States."    Such  a  price 

^  C.  R.  Van  Hise:  Conservation  and  Regulation,  p.  37. 


3l6       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

was  fixed  by  the  commission  on  March  3,  but  soon  afterwards 
four  of  the  signatories  to  the  agreement  were  indicated  for 
violations  of  the  Sherman  Anti-Trust  Law  J  On  November 
26  a  new  agreement  was  made  between  the  Attorney  General 
and  certain  print  paper  manufacturers,  according  to  which 
the  price  of  newsprint  paper,  on  all  new  contracts  to  January 
I,  1918,  and  on  all  contracts  in  existence  on  January  i,  1918, 
or  made  thereafter,  was  not  to  exceed  the  following  amounts : 

Roll  news  in  car  lots $3  00  per  100  pounds,  f.  o.  b.  at  the  mill 

Roll  news  in  less  than  car  lots 3  .25  per  100  pounds,  f.  o.  b.  at  the  mill 

Sheet  news  in  car  lots 3  50  per  100  pounds,  f.  o.  b.  at  the  mill 

Sheet  news  in  less  than  car  lots 3 .75  per  100  pounds,  f.  o.  b.  at  the  mill 

This  agreement  provided  that  after  April  i,  191 8,  maximum 
prices  and  terms  of  sale  were  to  be  determined  and  fixed  by 
the  Federal  Trade  Commission.  All  interested  parties  were 
invited  to  lay  before  the  commission  any  pertinent  data 
regarding  the  production  and  distribution  of  print  paper. 
The  commission  held  extensive  hearings  and  examined  cost 
figures,  vouchers  and  accounts  of  several  manufacturers. 
The  new  schedule  of  prices  left  the  price  of  sheet  news  in 
car  lots  unchanged;  the  price  of  roll  news  in  car  lots  was 
increased  by  10  cents,  while  the  price  of  roll  news  in  less 
than  car  lots  was  reduced  by  2^  cents  and  that  of  sheet  news 
in  less  than  car  lots  was  reduced  by  12^  cents. 

The  following  maximum  commissions  for  jobbers  or  other 
middlemen  were  provided : 

15  cents  per  100  pounds  on  carload  lots 

40  cents  per  lOO  pounds  on  less  than  car  lots 

60  cents  per  100  pounds  on  less  than  ton  lots 

These  were  added  to  the  actual  cost  of  paper  at  the  mill  or 
at  the  warehouse. 

It  was  set  originally  that  the  Federal  Trade  Commission's 
award  which  was  made  on  April  i,  191 8,  should  last  for  the 
duration  of  the  war  and  three  months  thereafter,  but  the 
findings  and  the  award  of  the  commission  were  appealed  for 
review  to  the  United  States  Circuit  Court,  which  on  Septem- 

'  War  Industries  Board,  Price  Fixing  Bulletin,  No.  9,  Paper,  October,  1918. 


THE    UNITED    STATES  317 

ber  25,  1 91 8,  rendered  a  decision  raising  the  prices  of  paper 
as  follows : 

Roll  news  in  car  lots $3  •  50    per  cwt. 

Roll  news  in  less  than  car  lots 3  -62  J  per  cwt. 

Sheet  news  in  car  lots 3  90    per  cwt. 

Sheet  news  in  less  than  car  lots 4 .02  J  per  cwt. 

These  revised  prices,  however,  did  not  last  very  long.  Be- 
cause of  increases  in  wood  cost,  rates  of  wages  and  freight 
rates,  prices  were  raised  by  the  Federal  Trade  Commission 
twice,  the  last  raise  made  July  i,  191 8,  having  brought  up 
the  prices  to: 

Roll  news  in  car  lots $3  ■  75*  per  cwt. 

Roll  news  in  less  than  car  lots 3  .  87!  per  cwt. 

Sheet  news  in  car  lots 4 .  I5i  per  cwt. 

Sheet  news  in  less  than  car  lots 4-271  per  cwt. 


CHAPTER    XII 

Conclusions 

Government  price  fixing  during  tlie  war  was  guided  little 
by  economic  principles.  It  was  not  uniform  either  in  its 
objects  or  in  its  methods,  feeling  its  way  from  case  to  case. 
It  might  be  termed  opportunist.^ 

The  fixing  of  prices,  according  to  Mr.  Hoover,  has  not  been 
evolved  out  of  any  desire  to  interfere  with  the  operation  of 
natural  trade  laws;  it  was  "simply  the  result  of  the  govern- 
ment being  forced  into  the  issue  of  becoming  the  dominant 
purchaser  and  thereby,  willingly  or  unwillingly,  the  price 
determiner  in  particular  commodities."  Mr.  Hoover  was  in 
favor  of  price  fixing,  because,  according  to  him,  an  abnormal 
demand  coupled  with  a  shortage  of  supply  produced  a  con- 
dition which  tended  to  oppress  the  poor,  and  government 
control  was  necessary  to  curb  speculation  and  profiteering 
which  were  putting  the  necessaries  of  life  beyond  the  reach 
of  the  average  man.  The  necessity  for  control  was  dictated 
not  only  by  humanitarian  considerations,  but  because  there 
was  danger  in  unrestrained  competition,  danger  to  the  se- 
curity of  the  established  institutions  of  law  and  order,  danger 
from  strikes  by  dissatisfied  laborers  and  from  riotings  by 
angry  mobs.^ 

The  solving  of  the  question  of  how  low  or  how  high  should 
be  the  price  fixed  by  governmental  decrees  is  of  paramount 
importance.  According  to  President  Wilson's  statement  of 
July  12,  191 7,  the  fixed  price  should  be  sufficient  to  "sustain 
the  industries  concerned  in  a  high  state  of  efficiency,  provide 
a  living  for  those  who  conduct  them,  enable  them  to  pay  good 
wages  and  make  possible  expansions  of  their  enterprises." 

1  F.  W.  Taussig:  "Price  Fixing  as  Seen  by  a  Price  Fixer,"  Quarterly  Journal  of 
Economics,  February,  1919,  p.  238. 

^  Mr.  Hoover's  letter  to  tlie  President,  March  26,  1918;  Mr.  Hoover's  speech 
before  the  Pittsburgh  Press  Club,  April  18,  1918,  and  his  other  public  utterances. 

318 


THE    UNITED    STATES  319 

It  has  been  continually  advanced  that  a  "fair  price" 
must  take  cognizance  of  the  cost  of  production,  but  the  cost 
varies  depending  upon  the  location  of  the  producer,  the 
character  of  his  plant  and  his  equipment,  efficiency  of  manage- 
ment, etc.  The  fixed  price,  irrespective  of  any  fairness  or 
justice  in  the  case,  must  be  high  enough  to  induce  continued 
production  of  the  highest  costing  portion  of  the  required 
amount  of  goods.'  The  greater  and  the  more  insistent  the 
demand,  the  greater  the  dependence  upon  every  possible 
source  of  supply. 

The  fixing  of  a  "reasonable"  price,  when  the  supply  of  a 
commodity  is  not  sufficient  to  meet  the  usual  demand,  can 
not  prevent  hardships  and  dissatisfaction.  Price  fixing 
alone  does  not  solve  the  problem  of  keeping  the  poor  provided 
with  commodities;  in  fact,  "reasonable"  prices  may  aggra- 
vate the  situation  by  giving  people  of  means  an  incentive  and 
an  opportunity  to  acquire  ahead  of  their  actual  needs,  thus 
leaving  the  less  fortunate  ones  without  any  supply.  Unless 
some  system  of  priority  of  distribution  and  of  rationing  is 
introduced  in  connection  with  price  fixing,  the  latter  is  doomed 
to  failure. 

The  fixing  of  the  whole  chain  of  prices  from  the  producer 
of  the  raw  material  to  the  retailer  involves  the  fixing  of 
margins  for  manufacturers  and  middlemen.  The  desire  on 
the  one  hand  to  stimulate  production  and  on  the  other  to 
satisfy  public  demand  for  lower  prices  led  the  government  in 
many  instances  to  cut  the  margin  of  the  wholesaler  and  re- 
tailer too  low.  This  was  true  for  flour,  sugar,  bituminous 
coal  and  a  few  other  commodities.  The  harm  done  in  the 
case  of  the  first  two  articles  was  not  very  great,  as  grocers 
could  afford  to  sell  some  things  without  profit  as  long  as 
their  other  prices  were  left  free.  With  regard  to  bituminous 
coal  the  situation  was  different;  here  the  dealer's  whole  busi- 
ness is  involved.  Too  narrow  a  margin  lessened  the  interest 
of  coal  distributers  in  their  work.     It  has   been   advanced 

1"  Economic   Difficulties  in  the   Way  of  Successful  Governmental  Price  Fix- 
ing," Economic  World,  July  21,  19 17,  p.  79. 


320       PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 

that  "if  the  jobbers  in  bituminous  coal  had  been  more  sure 
of  their  ground,  had  had  freer  hands  and  larger  margins  to 
worlc  on,  no  small  part  of  the  railway  congestion  from  which 
the  country  had  suffered  so  much  in  the  winter  of  191 8  might 
have  been  avoided."' 

The  experience  with  price  regulation  during  the  war  has 
shown  that  prices  can  be  controlled  without  giving  rise  to  a 
great  deal  of  evasion  and  without  too  much  running  counter 
to  the  competitive  spirit  which  animates  our  industrial 
society  when  a  great  emergency,  like  the  recent  war,  fires 
public  imagination  and  inclines  public  opinion  to  favor  any 
measures  which  are  likely  to  advance  the  national  cause. 
The  best  methods  of  control,  however,  are  those  which  enlist 
the  cooperation  of  the  people,  whose  interests  are  to  be 
affected  by  price  regulating  measures. 

1  B.  M.  Anderson:  "The  Price  Fixing  Policy,"  typewritten  manuscript,  p.  4. 
(Report  of  the  Committee  of  the  American  Economic  Association.) 


APPENDIX  TO  PART  II 


A  List  of  Commodities  the  Price  of  Which  Was  Brought 
under   Government   Control^ 


1917 

August 
September 

October 

November 

December 

1918 
January 
February 
March 
April 

May 
June 
July 


August 

September 

October 


Coal,  bituminous  and  semi-bituminous 

Coal,  anthracite;  coke;  copper  and  copper  wire;  iron  ore;  pig  iron; 

steel  plates;  wheat 
Steel  billets  and  blooms;  sheet  bars;  wire  rods;  skelp;  sugar;  sardines 
Bar  iron;  cast  iron  pipe;  steel  rails;  wire;  tin  plate;  ammonia 
Douglas  fir;  ammonium  sulphate 


Wood  alcohol;  yellow  pine;  acetic  acid;  nitrate  of  soda 

Zinc  sheet;  binder  twine;  castor  beans;  castor  oil 

Aluminum;  blackstrap  molasses  (imported)  manila  fiber 

Hemlock;  white  pine;  eastern  pine;  news-print  paper;  manganese 

ore;  munition  linters;  quebracho 
Portland  cement  (domestic);  hides;  rubber;  wool 
Harness  leather;  prunes;  raisins;  sulphuric  acid;  nitric  acid 
Cotton  goods,  such  as  denims,  ginghams,  sheetings,  tickings;  cotton 

yarns  and  linters;  wheat  flour;  rice;  building  tile;  charcoal;  hemp; 

sand  and  gravel 
Sole  leather;  glycerine;  dynamite 
Cottonseed  meal  and  oil;  wool  grease 
Burlap 


1  "Fluctuations  of  Controlled  and  Uncontrolled  Prices,"  Price  Fixing  Bulletin, 
No.  10,  December,  19 18,  pp.  5-7,  54. 


323 


Index  Nxunbers  of  Controlled  and  Uncontrolled  Prices  of  all  Commodities  by  Months,  August,  1916, 
to  September,  1918.    Average  Prices  for  the  Year  August,  1916,  to  July,  1917=  100 1 

Controlled  Uncontrolled 


1816 


1917 


1 80 


u 
u. 


a. 


3 


160 


1.40 


60 


40, 


1 — r 


I     I     I 


1 — r 


F  w    >    ~ 

ii  "     5     K 

St  o     ^    ^ 

1 — I — I — I    I  I — rnr 


1918 


2 


S      o.       I- 

5  >{    « 


>     o 

0  u 

1  o 


2 1 


I.     I      I      t I— I L 


«  ^   22   ;^   T 

(IJ        <         0.         %        ^ 

•^     E     <     r ^ 


■T~T~T 


^  ^  a  !^ 


a 
o 


I     r 


T — r 


180 


J L 


1916 


z 

J2_ 


r 


Of 

r 


I    I    J    I    r  I 


160 


140 


IZO 


100 


80 


60 


O 

u 
a 


40 


1917 


1916 


» War  Industries  Board.    "Fluctuations  of  Controlled  and  Uncontrolled  Prices." 

324 


Official  U.  S.  Food  Bulletin 


Harry  A.  Wheeler,  State  Food  Administrator  for  Illinois. 

Chicago,  Dec.  6. — Prices  being  paid  by  retailers  for  the  staples  named  and  the  retail  prices 
which  they  should  not  exceed  are  as  follows: 


Retailer 
Pays 

POULTRY 
Per  lb. 


Consumer 
Should  Pay 


Turkeys — 
Dry  picked — 

Fresh 31c     to  33c 

Cold  storage 23c    to  26c 

Chickens — 

Hens  and  chickens — 

3    to  4  lb.,  fresh  . . .  .23c 

2}  to  4  lb.,  cold  stor- 
age   i8c    to  20c 

4i  to  5  lb.,  fresh ....  23c    to  2Sc 

4 J  to  5  lb.,  cold  stor- 
age  i8c    to  20c 

Roosters,  fresh  .  .  .  .  i8c    to  20c 

Ducks 2SC    to  27c 

Geese 20c    to  22c 

EGGS 

Strictly  Fresh — 

Candled —  Per  doz. 

Extras,   approx.    24 

oz.,  per  doz S2c    to  540 

Cold  Storage — 

Candied- 
Extras,  approx. 

23  oz.,per  doz. .  .  .36JC  to  spIc 

No.  I,  approx. 

22  oz.,  per  doz. .  .35c    to  37c 
Note — Eggs  in  cartons  ic  per 

prices. 

HAMS 
Whole—  Per  lb. 

10  lbs.  to  12  lbs.  av- 
erage  31C    to  32c 

14  lbs.  to  16  lbs.  av- 
erage  29 Jc  to  30^c 

BACON 
Whole  pieces —  Per  lb. 

Best  grades 42c    to  44c 

Medium 37c    to  38c 

LARD 
Per  lb. 
Best  kettle  rendered — 

In  cartons 27c    to  28JC 

In  bulk 27c    to  28c 

Standard  pure — 

In  bulk 26JC  to  27 Jc 

Substitutes — 

In  bulk 22c    to  2SC 

COOKING   OILS 
In  cans —  Per  can 

Corn  oil.  pints 27c    to  30c 

Corn  oil,  quarts  .  . .  50}c  to  s61c 
Cottonseed,  small . .  28c    to  32c 
Cottonseed,  med  .  .  .  s6c    to  63}c 

RICE 

Per  100  lbs. 

Fancy  head $8 .  75  to  $ i o .  00 

Blue  Rose 8.00  to  9.00 


Per  lb. 
32c  to  38c 
24c  to  31c 


to  24c   24c  to  29c 


19c  to  2SC 

24c  to  30C 

19c  to  25c 

20C  to  2SC 

27c  to  32c 

22c  to  27c 


Per  doz. 
S3C  to  5PC 

375C  to  44^c 

38c  to  42c 
dozen  above 

Per  lb. 
33c  to  37c 
3ijc  to  35}c 

Per  lb. 
4SC  to  soc 
40c  to  44c 

Per  lb. 

31C    to  36}c 
30c     to  3SC 

29c    to  34JC 

24JC  to  3IC 

Per  can 
30C    to  37}c 
S65c  to  70C 
31  jc  to  40C 
63c    to  70C 

Per  lb. 
lojc  to  14c 
IOC   to  13c 


POTATOES 
Per  100  lbs.  Per  pk.,  15  lbs. 
No.  I  Wisconsin, 
Minnesota  and 
Dakota |l. 8s  to  $2. 10     33c  to  39c 


Consumer 
Should  Pay 


Per  lb. 

7ic  to 


84c 


Retailer 
Pays 

SUGAR 
Per  100  lbs. 
Granulated  in  bulk  $7.64  to  $7.77 

FLOUR 
(Well  known  advertised  mill  brands  in  cotton 
bags.) 

Per  bag 

J  brl $2.65  to  $2.70 

i  brl 1.34  to    1.36 

5  lbs.. 30  to       .32 

Graham — Pure — 
In  5  lb.  bags.  .  .  .27 J  to      .30 

RYE   FLOUR 
(In  cotton  bags) 

Per  bag 
$1.27  toll. 33 


Per  bag 
$2.80  to  $2.95 
1 .42  to    1.49 
■33  to      .37 

35 


.30  to 


Bohemian  sty., 

mixed,  J  brl.  ; 
Dark,    pure,    J 

bri 

Bohemian  sty., 

mixed,  5  lbs.. 
Dark,   pure,     5 

lbs 


White,  bulk .  . 
Yellow,  bulk .  , 


Per  bag 
Si. 35  toji. 


45 


I.I2}tOI.22  1.20  to      1.3s 


.  29   to    .  30 

. 26^  to     .  29i 

CORN   MEAL 
Per  100  lbs. 


.32  to       .30 


.29  to 


■34 


.55 
■    5 


Evaporated — 


(unsweetened)  . 
Condensed — 

(sweetened) — 
Highest  grades .  . 
Medium  grades.  . 


45  to  Js.75 
Soto    6.00 

MILK 

Per  can 
.iijc  to  125C 


Per  lb. 
6c    to    6|c 
6c    to    70 


Per  can 
13c    to  15c 


isfc  to  i7ic  i6c    to  22c 

.i4|c  to  isjc  l6Jc  to  i8Jc 
BUTTER 
Creamery —                      Per  lb.  Per  lb. 

Extras,  fresh,  tubs. 47 Jc  to  485C  485c  to   53ic 

Firsts,  fresh,  tubs..432C  to  45c  44JC  to    soc 

Cold  storage 41c    to  43c  42c    to  48c 

Note — ic  higher  in  cartons  than  tubs. 

OLEOMARGARIN 
Standard  Grades —         Per  lb. 

In  cartons 29c    to  30c 

In  rolls 28c    to  29c 

Medium  Grades — - 
In  rolls  and  bulk  .  .  .26c    to  28c 
BEANS 
Per  100  lbs. 
Navv,  hand- 
picked liS-SO  to  S16.SO 

Lima is. 00  to     16.00 

PRUNES 
California — 

Santa  Clara —  Per  lb. 

so  to  60  prunes,  per 

lb ii}c 

60  to  70  prunes,  per 

lb lojc 

90   to   100    prunes, 

per  lb 9}c 

HOMINY 
Per  100  lbs. 
In  bulk Is .  so  to  16 .  00 


Per  lb. 
32c     to  3SC 
31C    to  34c 

29c    to  33c 

Per  lb. 

I7}c  to  20jc 
17c  to  30C 


Per  lb. 
to  13c  13c  to  17c 
to  iijc  13c  to  i6c 
to  IOC  lie  to  14c 

Per  lb. 

6c  to  7C- 


325 


326 


PRICES  AND  PRICE  CONTROL  DURING  THE  WAR 


CHEESE 

American,  full  cream, 

whole 28c  to  32c      34c    to  40c 

American,  full  cream, 

cut  to  order 28c  to  32c       35c    to  40c 

American,  full  cream, 

brick,  whole 29c  to  31c       33c    to  39c 

American,  full  cream, 

brick,  cut  to  order  29c  to  3 ic       36c    to  43c 


Oflficial  U.  S.  Food  Bulletin — Continued 

SALMON 


Canned  Salmon- 

i-lb.,  tall  cans —         Per  doz.  Per  can 

Pink $1.95  to  $2. 10  19c    to  23c 

Red  Alaska 2.7510    2.95  27c    to  33c 

SYRUP 

Per  doz.  cans        Per  can 
Corn,    90%     and 
cane  10%  mix- 
ture  $i.42j  to  $1.52^    13c   to  17c 


FISH — There  are  heavy  runs  of  blue  back  herring  and  cisco.  The  herring  are  costing  retailers 
8  to  10  cents  per  pound  and  cisco  12  to  14  cents  per  pound.  These  are  good  fish,  and  the  cisco 
especially  are  very  palatable.    Try  these  fish  for  Friday. 

Delivery  service  is  expensive.  Carry  your  goods  home  if  you  can  and  do  not  exact  more  than 
one  delivery  daily. 

If  you  carry  goods  home  you  are  entitled  to  less  than  the  highest  prices. 

Many  grocers  have  inaugurated  a  system  of  charging  5c  per  delivery.  This  is  a  just  charge  if 
prices  are  reduced. 

All  quotations  are  for  high  grade  goods  unless  otherwise  stated.  If  you  pay  highest  prices  you 
are  entitled  to  high  quality. 


INDEX 


Acetate  of  lime  (U.  S.) :     price  fluctuations,  304; 

control,  30s. 
Agricultural  laborers  (U.  S.),  wages,  196. 
Aluminum    (U.    S.) :     price   fluctuations,    290; 

control,  205,  290-291. 
American  colonies,  early  conditions,  10. 
Ammonia    (U.    S.):     price    fluctuations,    305; 

control,  217,  30s. 
Animal  food  (G.  B.),  price  fluctuations,  13-15. 
Arsenic  industry  (U.  S.),  control,  217. 
Articles  of  Commerce  Act  (G.  B.),  107. 
Asquith,  Herbert  H.,  96-97. 
Australia,  drought  of  1915,  SO. 

Bacon : 

(G.  B.):     price  fluctuations,  26;  profits,  68; 
control,  13s. 

(U.  S.):     price  fluctuations,  185,  190. 
Baltimore:     percentage  of  increase  in  cost  of 

living,  201;  wheat  prices,  224. 
Bankruptcies  (G.  B.),  decrease  in,  83. 
Barley   (U.   S.):     price  fluctuations,   185;  con- 
trol, 213. 
Baruch,  Bernard  M.,  204,  287-288,  291. 
Beans:     Great  Britain,  140;  United  States,  213. 
Beer,  near  (U.  S.),  control  of,  217. 
Bevan,  102. 

Binder  twine  (U.  S.),  control,  303. 
Board  of  Trade  Committee  on  Prices  (G.  B.) : 

investigations,  66;  powers,  108. 
Boots  and  shoes  (G.   B.):     price  fluctuations, 

34;  profits,  73- 
Borrowing    (G.    B.) :     large,    by    government, 

cause  of  rise  in  prices,  37. 
Bread: 

(G.   B.):»  early  legislation,  6;  price  fluctua- 
tions, 27;  profits,  69. 

(U.   S.) :     price  fluctuations,    190,    235-236; 
Baking  Division  of  Food  Administration, 
235;  control,  217,  235-236. 
Brick  (U.  S.).  control,  205. 
British  Association  for  Advancement  of  Science, 

investigations.  80-81,  94. 
Bronze  (G.  B.),  issues,  40. 
Buffalo,  wheat  prices,  224. 
Building  materials  (U.  S.):     price  fluctuations, 

312-313;  control,  314-315- 
Butter: 

(G.  B.):     price  fluctuations,  29;  control,  136. 

(U.  S.):     price  fluctuations,    185,    190,   259; 
control,  213,  259;  profits,  260. 
Buying,  reckless,  47. 

Calico  Printers  Association  (G.  B.),  profits,  73. 

Call,  G.  E.,  222. 

Calthrop,  Guy,  147. 

Cannan,  E.,  63,  6s,  84. 

Canned  goods  (U.  S.),  control.  213. 

Cattle: 

(G.  B.),  number,  158. 

(U.  S.),  price  fluctuations,  185;  production, 
252-254- 

Causes  of  the  rise  in  prices:  inflation  of  cur- 
rency, 36;  obstruction  of  supply  and  intensi- 
fication of  demand,  43;  increased  consump- 
tion, 45;  reckless  buying,  47;  higher  cost  of 
production,  47;  decline  in  supply  of  commodi- 
ties. 48;  high  freight  and  insurance  rates,  58; 
taxation.  62;  hoarding  by  consumer,  63,  104; 
profiteering,  64;  high  wages,  82;  demands 
of  government,  104;  panic  conditions,  104. 


Cement  (U.  S.),  control,  205. 
Cereals  (G.  B.),  price  fluctuations,  19. 
Charcoal  (U.  S.),  price  fluctuations,  277. 
Charts: 

(G.    B.):     showing   rise   for    1915-1917,  19; 
course  of  wholesale  prices,  171;  rise  in  retail 
prices  of  food,  172. 
(U.  S.):     price  of  wheat  and  bulk  flour  at 
MinneapoUs,   232;  refiners'  stocks  of  raw 
sugar,   244;  index   numbers  of  controlled 
and  uncontrolled  prices  of  all  commodities 
by  months,  August,   1916,  to  September, 
1918,  322. 
Checks  (G.  B.),  increase  in  use  of,  41-42. 
Chemicals  and  drugs  (U.  S.):    price  fluctua- 
tions, 1913-1918,  182;  control,  304-306. 
Cheese: 

(G.  B.):     price  fluctuations,  30;  profits,  67; 

control,  137. 
(U.  S.):     control,  213,  260;  profits,  261. 
Chicago:     percentage  of  increase  in  cost  of  liv- 
ing, 201;  wheat  prices,  227;  milk  situation, 
256-257. 
Chiozza-Money,  Sir  L.,  60. 
Churchill,  Winston,  61. 
Clarke,  E.  A.  S.,  284. 
Clothing: 

(G.  B.):     price  fluctuations,  33-34. 
(U.  S.):     price  fluctuations,  1913-1918,  182, 
191-199,  201. 
Clynes,  J.  R.,  96. 
Coal: 

(G.  B.):     price  fluctuations,  1914-1917,  21, 
34-35;  profits,  95;  causes  of  high  prices,  96; 
control,  142-150;  appointment  of  Coal  Con- 
troller, 147;  Coal  Mines  Control  Agreement 
Act,  149. 
(U.  S.):     production,  262,  271;  price  fluctua- 
tions, 185,  192-193,  263;  control,  264-266; 
profits,    26s,    267-268;    jobbers'    margins, 
268-269;   retail  prices,   269-271;  remedies 
for  coal  shortage,  271-273;  stimulation  of 
production,    273;    price    fixing,    273-274, 
319-320. 
Cocoa  (G.  B.).  price  fluctuations,  21. 
Coffee  (G.  B.):     price  fluctuations,  12,  14-15; 

control,  141. 
Coke  (U.  S.):  price  fluctuations,  185,  275-276, 

279;  profits,  277. 
Commission  of  Inquiry  into  Industrial  Unrest 

(G.  B.),49. 
Committees  and  commissions  established   (G. 

B.),  163. 
Committee   of   Grain    Exchanges   in   Aid   and 

National  Defense  (U.  S.),  224. 
Committee  on  National  Expenditure  (G.  B.), 

investigation  of,  73- 
Commodities,  decline  in  supply  of  (G.  B.),  48. 
Consumption  in  United  States,  45,  54. 
Control : 

(G.  B.):  decentralization,  112-113;  criticism, 

161-167. 
(U.  S.) :     powers  of  War  and  Navy  Depart- 
ments. 203;   agreements  between   govern- 
ment   and   producers,     204;    Lever    Food 
Control  Act,  206-209. 
Copper  (U.  S.):     price  fluctuations,  185,  291; 

control,  205,  291-294. 
Copra  oil  (U.  S.),  control,  213. 
Corn  Production  Bill  (G.  B.),  154-1S5. 
Cornmeal  (U.  S.):     price  fluctuations,  185,  190; 
control,  213. 


22 


327 


328 


INDEX 


Cost  of  living: 

(G.  B.):     relation  between  prices  and  earn- 
ings, 88;  cause  of  industrial  unrest,  loi. 
(U.S.):     increases  in,  197-202. 
Cotton: 

(G.  B.):     price  fluctuations,   14,  20-21;  im- 
ports, 54;  profits  of  cotton  spinning  com- 
panies, 72. 
(U.   S.):    price  fluctuations,    185,   298-299. 
303;    production,    298-299;    consumption, 
298,  300;  control,  299,  303;  exports,  300; 
cotton  fabrics,  205;  cottonseed  and  cotton- 
seed oil,  213,  217;  cotton  yarn,  302. 
Cotton,  Joseph  P.,  255. 
Courtauld's,  Ltd.  (G.  B.),  profits,  72. 
Cows  (G.  B.),  restrictions  on  slaughtering  of, 

SO. 
Cunard  Company  (G.  B.),  profits,  73. 
Curdy,  123. 
Currency  (G.  B.):     expansion  of,  cause  of  rise 

in  prices,  36;  increase,  40. 
Customs  duties  (G.  B,),  cause  of  high  prices,  62. 

Davenport,  E.,  258. 

Davenport,  Lord,  109-110. 

Debts,  total  national,  44. 

Decline  in  supply  of  commodities  (G.  B.),  48. 

Departmental  Committee  on  Prices  (G.  B.),  59. 

Destruction  of  property  (G.  B.),  49. 

Distress,  absence  of  (G.  B.),  80. 

Dried  foods  (U.  S.),  control,  213. 

Drink.     See  Liquor. 

Duluth,  wheat  prices,  224'. 

Eastern  Steel  Company,  284. 

Eastman's  (G.  B.),  profits,  75. 

Effects   of    high    prices    (G.    B.) :     increase    in 

wages,  81,  84;   decrease  in  bankruptcies,  83; 

improved  conditions  for  work  people,  79-80, 

82.  8S. 
Eggs: 

(G.  B.):     price  fluctuations,  31. 

(U.  S.):     price  fluctuations,   185,    190;    con- 
trol, 213. 
Exports  (G.  B.):     restrictions,  48;  volume,  50- 

52. 

Fair  price  lists:     Great   Britain,    105;   United 

States,  216-218. 
Farm  products  (U.  S.),  price  fluctuations,  1913- 

1918,  182. 
Federal  Trade  Commission  (U.  S.),  255. 
Feeds  (U.  S.):  control,  217. 
Ferens,  E.  R.,  96. 
Fertilizers  (U.  S.),  control,  217. 
Fish: 

(G.  B.):     price  fluctuations,  27;  profits,  66; 

control,  141. 
(U.  S.):     control,  213,  217. 
Flax(G.  B.):     price  fluctuations,  21. 
Flour:     See  also  Grain. 

(G.   B.):     price  fluctuations,   27;   tariff,   S9; 

Flour  and  Bread  Order,  130. 
(U.  S.):     United  States  Millers'  Committee, 
22s ;  control  of  the  mills,  229;  Food  Ad- 
ministration Milling  Division,  229;  prices. 
190,  229,  231,  233;  voluntary  agreement  of 
millers,    229-230;    control    of    wholesaling 
and  retailing,  234;  efforts  to  prevent  hoard- 
ing, 234;  profits,  234-235. 
Food  Administration   (U.   S.) :     establishment, 
209;  control  of  prices,  206,  209;  policy,  210- 
218. 
Food: 

(G.  B.):  price  fluctuations,  12,  14,  21,  33; 
imports,  53-54;  maintenance  of  supplies, 
58,  105;  quantity  available  in  1909-1913, 
57-58;  unequal  distribution,  cause  of  labor 
unrest,  loi;  control,  104;  appointment  of 
food  controller,  109-110. 
(U.  S.):     price  fluctuations,  1913-1918,  182, 


197-199,  201;  Food  Survey  or  Production 
Bill,  206;  Lever  Food  Control  Act,  206-209. 

Ford,  W.  F.,  47. 

France,  early  legislation,  6-10. 

Freight  and  insurance  rates  (G.  B.) :  cause  of 
high  prices,  58;  restrictions  on  ocean,  60. 

Fuel: 

(G.  B.) :  price  fluctuations,  33. 
(U.  S.):  price  fluctuations,  262;  Hitchcock 
resolution,  262;  appointment  of  Fuel  Admin- 
istrator, 265;  price  fixing,  265-268,  274;  job- 
bers' margins,  268;  retail  prices,  269;  efforts 
to  relieve  shortage,  271-275;  production,  273. 

Furniture  and  furnishings  (U.  S.),  182,  201. 

Galveston,  wheat  prices,  224. 
Garfield,  H.  A.,  223. 
Gasoline  (U.  S.),  price  fluctuations,  185. 
Gary,  Judge,  283,  284, 
General  Munitions  Board  (U.  S.),  204. 
Girondins,  8. 

Gold    (G.    B.):     effect  of,   on  prices,  40;  esti- 
mated amount  in  United  Kingdom,  June  30, 
1914,  40. 
Gold,  world  production,  40. 
Gore,  Thomas  P.,  206,  224. 
Governmental  control  and  price  fixing: 

(G.  B.):     fair  price  lists,  105;  Unreasonable 
Withholding  of  Food   Supplies  Act,    107; 
Cabinet  Committee  on  Food  Supplies,  107; 
Royal   Sugar   Committee,    108;    Board   of 
Trade,  authority  of,  108;  appointment  of 
food  controller,  109-110;  Articles  of  Com- 
merce Act,  107;  food  control  committees, 
113. 
(U.  S.):     National  Defense  Act,  203;  Lever 
Food  Control  Act,  206-209;  fair  price  lists, 
216-218;  reasons  for,  318;  results,  319-320. 
Grain:     early  legislation  in  France,  8;  control 
(U.  S.),  129-131;  U.  S.  Food  Administration 
Grain  Corporation,  226-228. 
Gravel  (U.  S.),  control,  205. 

Hagan,  L  M.,  222. 

Ham  (U.  S.),  price  fluctuations,  185. 

Hanna,  Hugh  S.,  194. 

Hides  and  leather  (U.  S.),  price  fluctuations, 
185,  307;  control,  205,  308, 

Hitchcock  resolution,  262. 

Hoarding:  by  consumer  (G.  B.),  63;  provision 
against,  by  dealers  (U.  S.),  216. 

Hogs  (U.  S.):  price  fluctuations,  185;  produc- 
tion, 249-250;  stimulation  of  production,  251 ; 
control,  252, 

Hollow  tiles  (U.  S.),  control,  205. 

Homer,  W.  S.,  284. 

Hops  (G.  B.),  price  fluctuations,  21. 

Hoover,  Herbert,  210,  211,  226,  231,  241,  243, 
318. 

House  of  Commons  Select  Committee  (G.  B.), 
investigations,  44. 

House  furnishings.  See  Furniture  and  fur- 
nishings. 

Housing.     See  Rents. 

Houston,  David,  61,  207. 

Hurd,  A.,  49. 

Imports  (G,  B.):  volume,  50-53.  58;  table,  56; 
increased  cost  of,  54-55. 

Income  taxes,  1914  and  1917  (G.  B.),  71. 

Increased  consumption,  cause  of  high  prices,  45. 

Indigo  (G.  B.),  price  fluctuations,  13. 

Inflation,  cause  of  high  prices,  36-44. 

Insurance  and  freight  rates:  cause  of  high 
prices,  58;  cost  of,  against  war  risk,  62. 

Iron  and  steel  (U.  S.):  wages,  196;  price  fluc- 
tuations, 278-279.  28s;  pig  iron,  279;  control, 
205,  279-283,  286-289;  profits,  283;  confer- 
ence between  government  and  producers, 
287-288. 


INDEX 


329 


Jam  (U.  S.),  control,  141. 

Joint  stock  undertakings  (G.  B.),  earnings  of, 

71. 
Journal  of  Royal  Statistical  Society,  60,  62. 

Kansas  City,  wheat  prices,  224,  227. 

Labor:     See  also  Wages. 

(G.  B.) :     effect  of  diversion  on  production, 
48;  shipping,  60;   unemployment  at  out- 
break of  war,  78;  payments  to  idle  work- 
men on  account  of  cotton  restrictive  order, 
79;  increase  in  number  of  women  workers, 
80;  increased  demand,  81;  increased  wages, 
81;  improved  conditions,  85;  cost  of  living, 
88,  91. 
(U.  S.) :     Cost  of  living,  200;  effects  of  higher 
wages,  202. 
Labor  unrest  (G.  B.):     trade  disputes,  92,  97; 
causes,  93-94,  loi;  investigations  of  British 
Association  for  Advancement  of  Science,  94; 
demands  for  higher  wages,  98;  nationalization 
of  industries  demanded,   98;   Trades  Union 
Congress,  98-99;  appointment  of  commission 
of  inquiry,  100. 
Lackawanna  Steel  Co.,  284. 
Lamb  (U.  S.),  price  fluctuations,  190. 
Lambert,  George,  55. 

Lard  (U.  S.):     price  fluctuations,  185,  190;  con- 
trol, 213. 
Lauck,  S.  Sett,  194. 
Law,  Bonar,  74,  124. 
Lawson,  W.  R.,  82. 
Lay  ton,  W.  E.,  115. 
Lloyd  George,  David,  100. 
Lead  (G.  B.),  price  fluctuations,  21. 
Leather  (U.  S.):     price  fluctuations,  185,  308; 

control,  205,  308-309. 
Legislation: 

Early,  in  France,  6-9. 

(G.  B.) :     Unreasonable  Withholding  of  Food 
Supplies   Act,    107;   regarding   meat,    131; 
Price  of  Coal  Limitation  Act,  145. 
(U.   S.):     early,    10;   National  Defense  Act, 
203;   Lever   Food    Control   Act,    206-209; 
Food  Survey  or  Production  Bill,  206. 
Leppington,  C.  H.  d'E.,  82. 
Lever  Food  Control  Act  (U.  S.) ,  206-209. 
Licensing  system  and  control  of  margins  (U.  S.), 

212-214. 
License  taxes  (G.  B.),  cause  of  high  prices,  62. 
Light  (G.  B.).  33. 

Linseed  (G.  B.),  price  fluctuations,  13. 
Lipton,  Ltd.  (G.  B.),  profits  of,  76. 
Liquor  (G.  B.):     price  fluctuations,  21,  182. 
London  stores'  profits,  74-76,  85-86. 
Lough,  E.,  124. 

Lumber  and  building  materials  (U.  S.) :     price 
fluctuations,  182,  311;  control,  205,  311-312. 

McCumber,  Porter  J.,  224. 
McKenna,  R.,  36,  66,  115. 
Manila  fiber  (U.  S.),  control,  303. 
Manufactures  (G.  B.),  imports,  53-54. 
Materials,    raw    (G.    B.) :     price   fluctuations, 

12-14;  imports,  53-54. 
Meat: 

(G.  B.) :  price  fluctuations,  19,  25 ;  consump- 
tion, 46;  causes  of  rise  in  price,  50;  increase 
in  price  out  of  proportion  to  increase  in 
freight  rates,  61;  profits,  68;  control,  131- 
135 ;  quantity  available,  159. 
(U.  S.):  price  fluctuations,  190;  production, 
249;  control,  213,  254-255;  Meat  Division 
of  Food  Administration,  255;  profits,  255. 
Merchants  Committee  of  London  Chamber  of 

Commerce,  165. 
Mercury  (U.  S.) :     price  fluctuations,  294;  con- 
trol, 294. 
Metals  and  metal  products,  price  fluctuations: 
Great  Britain,  21;  United  States,  182. 


Milk: 

(G.    B.):     price  fluctuations,    29;   consump- 
tion, 46;  causes  of  high  prices,  49;  profits, 
66-67;  control,  1 19-123. 
(U.  S.):     price  fluctuations,   185.   190,   256; 
control,    213,    257-259;   in   Chicago,    256- 
257;  Milk  Producers'  Association,  256-257. 
Minerals  (G.  B.),  price  fluctuations,  13-14,  20. 
Minneapolis:     wheat,  224;  flour,  229. 
Money,   gold,  silver  and  uncovered  paper,   in 

circulation  in  40  principal  countries,  44. 
Montagne,  8. 

Munitions:  profits  of  firms  in  G.  B.,  73;  con- 
trol in  United  States,  203;  United  States  Gen- 
eral Munitions  Board,  204. 

National  Association  of  Sheet  and  Tin  Plate 

Manufacturers,  284. 
National  Defense  Act,  203. 
National  Trades  Union  Congress  (G.  B.),  103. 
National  Union  of  Railways  Employees,  98. 
Nationalization     of     industries,     demand     for 

(G.  B.),  98. 
Nayle  Steel  Co.,  284. 
New  Orleans,  wheat  prices,  224. 
Newsprint  paper   (U.  S.) :     price  fluctuations, 

315;  control,  31S-317. 
New  York:     percentage  of  increase  in  cost  of 

living,  201;  wheat  prices,  224. 
Nicholson,  Prof.  J.  S.,  38,  71. 
Nickel  (U.  S.):     price  fluctuations,    294;   con- 
trol, 205,  295. 
Nitrate  of  soda  (U.  S.) :     production,  306;  price 

fluctuations,  306;  control,  306. 
Nitric  acid    (U.   S.):     price  fluctuations,   305; 

control,  205,  306. 
Notes  and  certificates  outstanding  (G.  B.),  38. 

Oakland,  percentage  of  increase  in  cost  of  living, 

201. 
Oats: 

(G.  B.) :     Oats  and  Maize  Products  Orders, 
131;  control,  154,  156;  area  under.  157. 

(U.  S.) :     price  fluctuations,  185;  control,  213. 
Ocean  freight  rates  (G.  B.),  increased,  59- 
Oleomargarine:     Great     Britain,    31;    United 

States,  213. 
Omaha,  wheat  prices,  224,  227. 
Onions  (G.  B.),  control,  141. 

Paish,  Sir  George,  54.  62,  84. 

Palgrave,  Sir  Inglis,  38. 

Palm  Oil  (U.  S.),  control,  213. 

Paper   (U.  S.),  price  fluctuations,    1913-1918, 

182. 
Pauperism  (G.  B.):    decline  of,  79;  table,  80. 
Peabody,  F.  S.,  264. 
Peanut  oil  and  peanut  meal  (U.  S.),   control, 

213. 
Peas:     Great  Britain,  140;  United  States,  213. 
Petroleum:     Great  Britain,  21;   United  States, 

185,  277. 
Philadelphia:   percentage  of  increase  in  cost  of 

living,  201;  wheat  prices,  224. 
Phillips,  Marion.  102. 
Pig  iron,  lead  and  tin  (U.  S.),  price  fluctuations, 

185. 
Pigou,  A.  C,  Prof.,  38. 
Pigs  (G.  B.),  number,  158. 
Platinum  metals  (U.  S.):     control.  296-297. 
Population    (G.    B.):     food    requirements   for, 

57;  has  remained  stationary,  58. 
Pork  (U.  S.),  price  fluctuations,  185. 
Potatoes: 

(G.  B.):     price  fluctuations,  31;  profits,  66; 
control,  123-129,  156;  area  under,  157. 

(U.  S.),  price  fluctuations,  185,  190. 
Poultry  (U.  S.),  control,  213. 
Pretyman,  E.  G.,  45,  61. 
Price    Fixing    Committee    of    War    Industries 

Board  (U.  S.),  205-206. 


330 


INDEX 


Prince  of  Wales  Fund  (G.  B.).  78. 
Print  Cloths  (U.  S.).  price  fluctuations,  303. 
Price  Interpreting  Boards  (U.  S.),  216-217. 
Production:  .         ^ 

(G.  B.):     high  costs  of,  47-48;  quantity  of 

home,  55.  58;  table,  56. 
(U.    S.^:     agreements    between    government 
and    producers,    204;   wheat,    219;   sugar, 
237.  247-248;  meat,  249. 
Production  of  gold,  world,  40. 
Profiteering: 

(G.  B.):     steamship  lines,  60;  result  rather 
than  cause,  6s;  in  foodstuffs,  66-70;  excess 
profits  tax  returns,   71;  earnings  of  joint 
stock  companies,  71;  London  stores  pro- 
fits, 74-76;  labor  unrest,  97- 
(U.  S.),  control  of,  214-215. 
Prothero,  G.  W.,  128,  154.  164. 
Public  Accounts  Committee  (G.  B.) ,  investiga- 
tions, 73. 
Pulse  (G.  B.).  control,  140. 
Purchase  price  defined  (U.  S.),  214. 

Quicksilver  (U.  S.),  control,  205. 

Rabbits,  wild  (G.  B.),  control,  141. 

Rags  (U.  S.),  control,  303. 

Rationing  in  United  States,  objections  to,  211. 

Reckless  buying,  cause  of  rise  in  prices,  47. 

Reed,  James  A.,  206. 

Replogle,  J.  L.,  287. 

Rents:     Great  Britain,  33;  United  States,  193. 

199,  201. 
Retail  Prices: 

(G.     B.):     price     fluctuations,     24;      Retail 
Prices  Order,  140; 

(U.  S.):     fluctuations,  188-193. 
Rhondda,  Lord,  36,  m. 
Rice  (U.  S.),  control,  213. 
Rosenwald,  Julius,  204. 
Rout,  Jacques,  8. 

Royal  Society,  investigations  of,  55-S6. 
Rubber: 

(G.  B.):     price  fluctuations,  21. 

(U.  S.):     production,  309;  price  fluctuations, 
182,  309;  control,  310-31 1. 
Runciman,  W.,  36,  45.  61,  66,  128.  156. 
Rye   (U.  S.),  price  fluctuations,   185;  control, 

212-213. 

St.  Louis,  wheat  prices,  224. 

Sand  (U.  S.),  control,  205. 

San  Francisco,  percentage  of  increase  in  cost  of 

living,  201. 
Scott,  Frank  A.,  205. 
Seattle,  percentage  of  increase  in  cost  of  living, 

201. 
Selborne,  Lord,  153. 
Selling  price  defined  (U.  S.),  214. 
Shadwell,  A.,  65. 
Sheep  (G.  B.),  number,  158. 
Shipping:     See  also  Tonnage. 

(G.    B.):     destruction,    49;    control,    60-61; 
profits,  73-74. 

(U.  S.) :     control  of  prices  of  ships  and  mate- 
rials for  navy,  203. 
Shoes:     Great  Britain,  34,  73;  United  States, 

l8s. 
Silver  coinage  (G.  B.),  net  issues  of,  39. 
Smillie,  Robert,  102. 
South   Wales   Commissioners   of   Inquiry   into 

Industrial  Unrest  (G.  B.),  69. 
Soya  bean  oil  and  meal  (U.  S.),  control,  213. 
Spelter  (U.  S.),  price  fluctuations,  185. 
Spokane,  percentage  of  increase  in  cost  of  living, 

201. 
Stanley,  Sir  Albert,  149. 
Steel  (U.  S.):     price  fluctuations,  185;  wages  in 

plants,  196;  control,  205.     See  also  Iron  and 

Steel. 
Stockyards  (U.  S.),  control,  217. 
Stores  (G.  B.),  profits  of,  74-76. 


Strachie,  Lord,  136. 

Sugar: 

(G.  B.):  price  fluctuations,  12-is,  28-29; 
tax  on,  62;  appointment  of  Royal  Sugar 
Commission,  108;  control,  114-119. 
(U.  S.) :  production,  237,  247-248;  causes  of 
shortage,  237-238,  241-243;  price  fluctua- 
tions, 185,  190,  238-241;  control,  212-213, 
216,  238-239;  Sugar  Distributing  Commit- 
tee, 240;  International  Sugar  Committee, 
240;  American  Refiners'  Committee,  240; 
rationing,  243-246;  Sugar  Equalization 
Board,  245;  consumption,  246;  profits,  246; 
restrictions  on  sale  of,  216. 

Sulphuric  Acid  (U.  S.) :     production,  307;  price 
fluctuations,  307;  control,  205,  307. 

Supply  of  commodities  (G.  B.),  48. 

Sweets  (G.  B.),  control,  141- 

Sykes,  A.,  254. 

(G.  B.):  Monthly  fluctuations  of  index 
numbers  of  commodities,  15;  wholesale 
prices  of  commodities  from  June,  1914.  to 
December,  1917,  16;  comparison  of  war  and 
prewar  annual  index  numbers,  17;  compari- 
son of  war  and  prewar  monthly  index  num- 
bers, 17;  showing  advance  in  prices  of  com- 
modities, 18;  rise  shown  by  Board  of  Trade 
index  numbers  of  wholesale  prices  of  47 
articles,  21;  fluctuations  of  yearly  average 
wholesale  prices  of  commodities,  22-23; 
showing  per  cent  of  increase  in  certain  arti- 
cles since  July,  1914.  32;  average  percent- 
age increase  in  prices  of  clothing  between 
July,  1914,  and  September,  1916,  34; 
world  production  of  gold  since  1906,  40; 
yearly  returns  of  foreign  trade  shipping, 
51;  imports  and  exports,  51;  volume  of 
trade,  53;  analysis  of  individual  groups  of 
imports  for  1916,  54;  quantities  of  food 
materials  imported  and  home  produced, 
56;  comparative  table  of  profits,  72;  net 
profits  of  London  stores,  74;  unemploy- 
ment among  trade  unionists  in  1900-1917, 
79;  number  of  paupers  in  receipt  of  poor 
relief,  80;  rise  in  cost  of  living  and  reduced 
purchasing  power  of  sovereign  spent  on  food 
in  U.  K.,  during  the  war,  89;  schedule  of 
maximum  wholesale  meat  prices,  133;  pro- 
duction of  coal,  1 9 13-19 1 7,  144;  crop  acre- 
age of  England  and  Wales,  157;  average  yield 
of  crops  per  acre  for  England  arid  Wales, 
158;  quarterly  movements  of  prices,  173; 
prices  at  end  of  March  quarter,  1914-1918, 
174;  growth  of  national  debt,  I75;  acreage 
under  crops,  176;  number  of  live  stock,  177; 
estimated  crops,  177. 
(U.  S.) :  index  numbers  of  wholesale  prices, 
1913-1918,  181-182;  movement  of  whole- 
sale prices,  183-185;  index  numbers  of  all 
commodities,  1916-1917,  187;  extent  of 
price  fixing  in  September,  1918,  188;  index 
numbers,  September,  1918,  188;  average 
money  retail  prices  and  per  cent  of  increase 
or  decrease  June  15  of  each  specified  year 
compared  with  June  15,  I9i3.  189;  relative 
retail  prices  of  food,  1913-1918, 190;  average 
and  relative  retail  prices  of  coal  in  ton  lots 
for  household  use,  192;  relative  wages  in 
leading  occupations,  1917,  compared  with 
1914-191S,  19s;  purchasing  power  of  wages 
measured  by  retail  prices  of  food,  197;  the 
nation's  food  bill,  198;  estimated  working 
man's  budget  in  191 1.  1914  and  1917.  as 
compared  with  1900,  200;  wheat  prices, 
231 ;  iron  and  steel  prices  in  dollars  per  gross 
ton,  285;  list  of  commodities  the  price  of 
which  was  brought  under  government  con- 
trol, 321;  official  U.  S.  Food  Bulletin,  323- 
324. 


INDEX 


331 


Tacoma,  percentage  of  increase  in  cost  of  living, 
201. 

Taxation  (G.  B.):  cause  of  high  prices,  62-63; 
check  to  consumption,  63;  income  and  prop- 
erty taxes,  71. 

Tea  (G.  B.):  price  fluctuations,  12,  14-15.  28; 
tax  on,  62;  profits,  66;  control,  138. 

TextUes:  Great  Britain,  13-14,  20-21;  United 
States,  302. 

Timber  (G.  B.),  price  fluctuations,  13.  See  also 
Building  materials. 

Tin  plate  (U.  S.),  price  fluctuations,  185. 

Tobacco:  Great  Britain,  21;  United  States, 
182. 

Tonnage  (G.  B.):  shortage,  38;  effect  of  short- 
age on  production,  49;  prices  paid  by  Great 
Britain  and  neutral  countries,  60. 

Torner,  R.  J.,  69. 

Trade  (G.  B.),  42,  50-53- 

Trades  Union  Congress  (G.  B.),  demands  in  be- 
half of  labor,  98-99. 

Transportation,  61,  199.  See  also  Shipping, 
Tonnage. 

Treasury  notes  (G.  B.):  issuance,  41;  relation 
of  issue  of,  to  rise  in  prices,  43. 

Unemployment  (G.  B.),  increase,  on  outbreak 

of  war,  78. 
United  States  Steel  Corporation,  283-284. 

Varlet,  8. 

Vegetable  food  (G.  B.),  price  fluctuations,  13-14. 

Wages : 

(G.  B.) :  increases  in  39,  81-82;  below  in- 
crease in  price  of  necessities,  82;  cause  of 
high  prices,  82. 

(U.  S.).  fluctuations  in,  194-197. 


War  Industries  Board  (U.  S.),  204-203. 

War  Risk,  cost  of  insurance  against,  62. 

Weeden,  W.  B.,  10. 

Welfare  (G.  B.),  improvement  in,  83. 

West  Penn  Steel  Co.,  284. 

Wheat: 

Early  legislation,  6. 

(G.  B.):     tariff,  59;  cause  of  high  prices,  96; 
efforts  to  increase  production,  151;  control, 
152-156;  area  under,  157. 
(U.  S.) :     control,  212-213;  production,  219; 
AUied   needs.   219;   prices,    185,   225,   227; 
acreage,    222;    Committee    of   Grain    Ex- 
changes in  Aid  and  National  Defense,  224; 
U.  S.  Millers'  Committee,  225;  measures 
adopted    by    Food    Administration,    225; 
Food   Administration   Grain   Corporation, 
226-228;  consumption,  228. 
Whiskey.     See  Liquor. 
Wholesale  prices   (U.   S.),   fluctuations,   1913- 

1918,  181-188. 
Women  workers  (G.  B.),  increase  in  number,  80. 
Wood  alcohol  (U.  S.) :     price  fluctuations,  304; 

control,  304. 
Wood  pulp  (U.  S.),  price  fluctuations,   1913- 

1918,  182. 
Wool     (U.     S.) :     production,    300-301;     price 

fluctuations,  185,  301;  control,  205. 
Workers'  Committee  (G.   B.):     investigations, 

95-96;  national  conference,  9". 
Workington  Iron  and  Steel  (G.  B.),  profits  of, 

73. 
Workmen   (G.   B.) :     condition  of,   78,   83;   in- 
crease in  wages  below  that  in  price  of  neces- 
sities, 82. 

Zinc:     Great  Britain,  21;  United  States,  20S, 
295-296,  311. 


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